PRAGUE, Nov 5 (Reuters) - Central European currencies
retreated slightly on Thursday, although the Czech crown hovered
near a 1-1/2 week high after investors reversed some bets that
the central bank would ease interest rates later in the day.
The Hungarian forint <EURHUF=> led losses in the region as
it slipped behind dollar firmness, and fell 0.3 percent despite
some signs of improvement for Hungary's hard-hit manufacturing
sector. []
In Romania, the leu <EURRON=> slipped back near the key 4.3
per euro support level a day after the proposed cabinet of Prime
Minister designate Lucian Croitoru failed to gain parliament's
approval. []
The crown gave back some of the gains it had won when
investors had closed short positions in anticipation the central
bank would leave rates unchanged on Thursday after improving
economic signs and recent currency weakness.
The unit had fallen back as much as 4.5 percent in the past
month on expectations the central bank may still cut interest
rates from a record low of 1.25 percent. []
"The interest rate decision in the Czech Republic today will
be a close one," Commerzbank said in a note. <ECONCZ>
"Some CNB board members had advocated lowering the benchmark
rate further by 25 basis points, but there are also good reasons
to leave it unchanged. For CZK exchange rates, the critical
factor should be how the decision is communicated."
Dealers said rate markets have priced in a 50 percent chance
for a cut. The crown <EURCZK=> dipped 0.1 percent to 26.02 per
euro by 0843 GMT, but was still 3 percent lower than at the last
central bank meeting in September. The Polish zloty <EURPLN=>
fell 0.2 percent.
Currencies have been knocked back in the past month, with
rising government deficits, political uncertainty and some
remaining chances to cut interest rates weighing.
Markets got a jolt on Wednesday after news Poland wants to
cut the amount of money it transfers to private pension funds in
a move to put a lid on rising public debt. []
However, analysts expect the correction only to be a blip,
and a Reuters poll on Tuesday showed the region's currencies
would return to firming by 2010 and post solid gains in the next
12 months, led by the zloty. []
Markets were also watching for bond auctions later in the
day in Hungary and Romania, both recipients of international
bailouts in the past year.
Dealers said Hungary's auction may be dampened by a recent
rise in yields and currency volatility. Yields have been sliced
in half in the past half-year, recently supported by
expectations for further monetary easing.
The minutes of the Hungarian central bank's October rate
meeting showed almost half of the rate setters wanted a bigger
rate cut than the 50 basis point reduction to 7 percent that it
delivered. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.021 26.008 -0.05% +2.81%
Polish zloty <EURPLN=> 4.259 4.251 -0.19% -3.38%
Hungarian forint <EURHUF=> 276.65 275.79 -0.31% -4.74%
Croatian kuna <EURHRK=> 7.261 7.278 +0.23% +1.43%
Romanian leu <EURRON=> 4.295 4.291 -0.09% -6.53%
Serbian dinar <EURRSD=> 94.021 94.44 +0.45% -4.83%
All data taken from Reuters at 0944 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus; Writing by Jason Hovet; Editing
by Ruth Pitchford)
