* Czech govt loses no-confidence vote, crown drops
* Search for new Hungarian PM continues
* IMF confirms 20 bln euro aid package for Romania
* Weak stocks pressure FX
By Jason Hovet
PRAGUE, March 25 (Reuters) - The Czech crown dropped on
Wednesday after the centre-right government lost a confidence
vote which could throw the country into a political impasse
during the global economic crisis.
Other emerging European currencies also fell back in early
trade, pulled lower by a fall in stocks as markets looked to
political talks in Hungary and an expected interest rate cut in
Poland. The International Monetary Fund also confirmed a 20
billion euro aid package for Romania.
Latvia's government has already fallen this year and
Hungary's prime minister has offered to step down due to rising
economic discontentment, but analysts said the defeat of Czech
Prime Minister Mirek Topolanek's cabinet was down more to
political wrangling. []
The crown <EURCZK=> lost 1.3 percent from Tuesday's domestic
close, bidding at 27.274 per euro by 0751 GMT.
"(The crown) might still remain under pressure, as
yesterday's news came in after some market participants had
already left. But a prolonged negative trend seems unlikely,"
Commerzbank wrote in a morning note.
Central Europe's once-booming economies have been punished
by the global slowdown as demand for exports drops and capital
flows reverse, pushing some countries to seek external aid.
The Czech Republic has fared better than regional peers such
as Hungary and Romania which rely more on foreign credit,
although analysts said a change of government raised uncertainty
about economic policy.
In Hungary, where talks are underway to choose a new leader
after Prime Minister Ferenc Gyurcsany offered to step aside at
the weekend, the forint <EURHUF=> lost 0.9 percent to 303.1 to
the euro. []
Romania's leu <EURRON=> held steady around 4.29 to the euro,
a level it has held for weeks as the government finalised
details for an IMF aid deal. The country agreed to the 20
billion euro package on Wednesday []
Dealers said the market was still in a wait-and-see mode
because of uncertainty about whether the IMF would ask the
central bank -- which dealers said has been intervening covertly
to help the currency -- to ease its grip on the exchange rate.
In Poland the central bank is expected to cut interest rates
by 25 basis points on Wednesday. The zloty <EURPLN=> bid 0.7
percent lower at 4.569 per euro.
"Currencies are falling because stocks are falling -- it is
a direct translation," said Ernest Pytlarczyk, head of financial
market research at BRE bank in Warsaw. "Besides that investors
await today's decision on interest rates and the market expect
the council to cut borrowing costs by 25 basis points."
Central European currencies have continued a sharp drop this
year after hitting record highs last summer, and many analysts
say weak foreign exchange rates will slow the pace of easing
cycles despite worsening economic signals.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.274 26.92 -1.3% -1.91%
Polish zloty <EURPLN=> 4.569 4.539 -0.66% -9.94%
Hungarian forint <EURHUF=> 303.1 300.5 -0.86% -13.05%
Croatian kuna <EURHRK=> 7.447 7.449 +0.03% -1.1%
Romanian leu <EURRON=> 4.292 4.291 -0.02% -6.47%
Serbian dinar <EURRSD=> 94.516 94.682 +0.18% -5.33%
All data taken from Reuters at 0857 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by David Stamp)
