* Czech cbank cuts rates to record low, crown underperforms
* Leu surges as IMF seen resuming lending in Feb
* Region recoups losses as core market pressures ease
(Adds leu, comments, new proces.)
BUDAPEST/WARSAW, Dec 16 (Reuters) - The Czech crown stayed
out of regional gains after the Czech National Bank (CNB) cut
interest rates to a new record low of 1 percent on Wednesday
despite recent swings in regional currencies.
The crown eased though other assets in the region firmed due
to a rebound in risk appetite, while news about a likely
resumption of International Monetary Fund (IMF) lending to
Romania prompted the leu to post an unusually big daily gain.
The crown <EURCZK=> eased 0.1 percent versus the euro by 1619
GMT, after the CNB announced its 25 basis point interest rate
cut. [] On Tuesday it shed 1.6 percent.
"I believe that this was the last rate cut in the current
cycle and that the first interest rate hike will not come before
mid-2010," said Radomir Jac, chief analyst at Generali PPF Asset
management in Prague.
"Still, today's decision is bit surprising when seen in
(the) context of the recently released data and growing risk
aversion in financial markets," he said. "(The) possibility of a
weaker crown was the key reason for keeping interest rates on
hold in November."
The leu, which moved much less in the past year than
regional peers, gained 0.7 percent to 4.217 against the euro
after an IMF official said the Fund may resume lending to
Romania in February.[]
"February is good news. Some people in the market have
priced in the next tranche will come only in March," one
Bucharest-based dealer said. "Overall, we had positive signals
from the IMF."
The country reached an agreement on Wednesday about steps to
reach the 2010 budget deficit target, allowing disbursement of
the aid tranche if it passes Parliament. []
ZLOTY LEADS
Poland's zloty <EURPLN=> gained one percent with dealers
saying the unit is the region's best performer.
"The zloty is doing better than we could expect in the
morning," said one Warsaw-based dealer. "Short covering pushed
it higher (before) but exporters plus new money are emerging,
boosting the unit."
The zloty has lost almost 3 percent since Dec. 4, when it
touched an 11-month high. In the same time Hungary's forint lost
the same, while the crown weakened 2.4 percent.
The forint <EURHUF=> firmed 0.3 percent on Wednesday.
The Polish central bank is seen keeping interest rates on
hold at its last 2009 meeting, but Hungary is expected to cut
rates next Monday. Hungary's FRAs are pricing in a 25 basis
point cut, but many dealers and analysts expect a half
percentage point reduction.
"The forint at 275 looks the balance exchange rate now,
which is good for exporters, importers and foreign currency loan
holders, but the central bank should not be scared by dips to
around 280 either," one Budapest-based currency dealer said.
Data showed on Wednesday that Hungary's annual gross wages
fell by an annual 1.6 percent in October, which analysts said
supported further rate easing.[]
By contrast Poland's corporate wages grew 2.3 percent
year-on-year, while corporate employment remained flat comparing
to the previous month. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.241 26.205 -0.14% +1.95%
Polish zloty <EURPLN=> 4.168 4.21 +1.01% -1.27%
Hungarian forint <EURHUF=> 277 278.07 +0.39% -4.86%
Croatian kuna <EURHRK=> 7.288 7.265 -0.32% +1.06%
Romanian leu <EURRON=> 4.217 4.245 +0.66% -4.8%
Serbian dinar <EURRSD=> 95.73 95.72 -0.01% -6.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +1 basis points to 109bps over bmk*
7-yr T-bond CZ7YT=RR -7 basis points to +91bps over bmk*
10-yr T-bond CZ10YT=RR 0 basis points to +78bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +4 basis points to +567bps over bmk*
5-yr T-bond HU5YT=RR +5 basis points to +515bps over bmk*
10-yr T-bond HU10YT=RR +4 basis points to +444bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1719 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Krisztina Than/Marton Dunai/Dagmara
Leszkowicz/Sandor Peto; Editing by Hugh Lawson and Victoria
Main)
