WARSAW, Oct 14 (Reuters) - Emerging Europe currencies opened
slightly stronger on Wednesday with only Romania's leu bucking
the regional trend after the country's parliament voted to
topple the government on Tuesday.
The centrists will stay in power in Bucharest until
parliament approves a new government.
But forming an administration will be tough before a
presidential election at the end of November, which has
polarised political groups and split the previous coalition
earlier this month.
"If political instability persists, Romania could de-couple
from the rest of the region in terms of both growth and currency
developments," Nicolaie Alexandru-Chidesciuc of ING Bank in
Bucharest said in a research note.
"Another rating downgrade would become more likely as well."
At 0704 GMT, the leu <EURRON> was 0.1 percent weaker to the
euro, trading near 7-month lows at 4.296.
Other currencies were up, with Poland's zloty <EURPLN=>
slightly higher and Hungary's forint <EURHUF=> leading gains.
Some dealers said market players in London sold euros in
exchange for Hungary's currency.
"Liquidity is thin for the moment ... so I think the forint
will retreat later," a dealer said.
"Risk appetite has increased and the dollar is weakening. I
can't think of any other reason why the forint has firmed,"
another dealer said.
In Poland, the statistics office will release September
inflation data at 1200 GMT. Analysts expect producer prices to
have risen 3.5 percent year-on-year last month.
"Should the MPC be disappointed today (by the inflation
data) this is likely to provide support for the zloty as it
would most likely rule out further rate cuts once and for all,"
analysts at Commerzbank wrote in a note.
A Reuters survey showed last week Poland's interest rate
will stay on hold at 3.5 percent for the fourth month running in
October and some analysts predict monetary policy tightening
could begin as early as the first half of 2010. []
In the Czech Republic, the crown <EURCZK=> was bid a touch
stronger although dealers said the unit would probably test the
weak side of 26 to the euro this week, continuing a recent
weakening trend.
"We will try 26 this week for sure, it is just a question of
when," Roman Fol, dealer at Raiffeisenbank, said. "It's still
the same song: We are watching the region and the market is
playing the central bank (comments)."
Czech central bank governor Zdenek Tuma and his deputy have
said this month that a rate cut may yet be on the cards, and the
bank has discussed using non-rate tools to prevent more crown
appreciation.
Twelve of 17 in the Reuters poll saw policymakers keeping
the two-week repo rate <CZCBIR=ECI> unchanged at a record low of
1.25 percent at their meeting on Nov. 5. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.885 25.915 +0.12% +3.35%
Polish zloty <EURPLN=> 4.217 4.223 +0.14% -2.42%
Hungarian forint <EURHUF=> 267.61 269.15 +0.58% -1.52%
Croatian kuna <EURHRK=> 7.25 7.25 0% +1.59%
Romanian leu <EURRON=> 4.296 4.294 -0.05% -6.55%
Serbian dinar <EURRSD=> 92.92 92.95 +0.03% -3.7%
All data taken from Reuters at 0804 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz,
editing by Mike Peacock)
