* Czech, Hungarian government crisis continues
* Czech cbank holds rates
* OTP gains on news of 400 billion forint govt loan
* Serbia secures 3 billion euro IMF deal
(Updates throughout with quotes, details, prices)
By Marton Dunai and Jason Hovet
BUDAPEST/PRAGUE, March 26 (Reuters) - Emerging European
currencies mostly eased on Thursday as political uncertainty in
Hungary and the Czech Republic hung on the region, while the
dinar ticked up after confirmation of a 3 billion euro IMF deal
for Serbia.
The Balkan state replaced an earlier International Monetary
Fund loan with a bigger 27-month programme that enforces
spending cuts and shores up the economy as the global slowdown
seemed nearer a new phase in central and eastern Europe.
The dinar <EURRSD=> was up 0.3 percent on the day to bid at
94.523 per euro by 1625 GMT. []
But regional political nerves stayed tense after the
frontrunner to be Hungary's new prime minister appeared to drop
out after failing to get support from the main opposition party.
[]
President Laszlo Solyom has urged early elections to end the
political gridlock after a weekend decision by Socialist Prime
Minister Ferenc Gyurcsany to step aside.[].
Czech President Vaclav Klaus accepted the resignation of
centre-right Prime Minister Mirek Topolanek, who lost a
no-confidence vote on Tuesday, and said a new government must be
formed quickly and be able to muster a majority. []
The Czechs are better positioned than neighbours due to
lower indebtedness and better fundamentals. And while the
country has not had a majority government since 1996, analysts
warned a deadlock amid the global slowdown raised risks.
"As such, we caution that failure to resolve the
government's future quickly and efficiently in the coming weeks
would trigger weakening pressure on Czech assets and the crown
in the medium term," Commerzbank said in a Thursday note.
The Czech crown <EURCZK=> hit a two-week low early before
stop losses helped it gain after a central bank meeting that
kept interest rates at a historic low. []
The unit bid at 27.078 to the euro late in the day, up from
a low of 27.54, while the forint was 0.6 percent weaker at 301.6
and the zloty was down 0.6 percent at 4.56 per euro.
RIGHT AID
Hungary held interest rates steady this week, while Poland
cut to historic lows on Wednesday. Some central bankers said on
Thursday Poland may need to pause its easing cycle or even end
it if the global situation improves. []
Romania's leu <EURRON=> gained 1 percent late on Thursday
one day after getting a 20 billion euro IMF/EU package that had
been flagged to markets for weeks. Central bank Governor Mugur
Isarescu said the deal could keep the Romanian economy growing
in 2009. []
"Investors from London are selling huge amounts of euros," a
Bucharest dealer said. "The IMF deal was priced in, but the fact
that it is not so restrictive as everyone thought gives hope
that Romania will respect the requirements of the deal."
Romania is one of three EU members along with Latvia and
Hungary that have gone for external aid to get it through an
economic slowdown that has reversed capital flows to the region,
raising worries over growth, banks and financing.
In Budapest, OTP <OTPB.BU> shares surged on Thursday,
boosted a government agreement to loan the bank around 400
billion forints ($1.80 billion) from IMF funds.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.078 27.28 +0.75% -1.2%
Polish zloty <EURPLN=> 4.56 4.535 -0.55% -9.76%
Hungarian forint <EURHUF=> 301.6 299.72 -0.62% -12.62%
Croatian kuna <EURHRK=> 7.459 7.444 -0.2% -1.26%
Romanian leu <EURRON=> 4.231 4.275 +1.04% -5.12%
Serbian dinar <EURRSD=> 94.523 94.84 +0.34% -5.34%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -37 basis points to 190bps over bmk*
4-yr T-bond CZ4YT=RR -53 basis points to +208bps over bmk*
8-yr T-bond CZ8YT=RR -8 basis points to +308bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1727 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 and
Marton Dunai, editing by Victoria Main)
