(Corrects headline to show Hungary central bank left
benchmark rates unchanged)
* FX broadly unchanged in slow market
* Hungary keeps rates flat, hints at future cut
* UK, U.S. markets closed for holiday, cutting liquidity
* Czech debt financing plans eyed
(Adds Hungary's rate decision, prices)
By Gergely Szakacs and Dagmara Leszkowicz
BUDAPEST/WARSAW, May 25 (Reuters) - Emerging Europe's
currencies were stable on Monday, with the forint unchanged
after the Hungarian central bank (NBH) kept interest rates on
hold but said it may cut them later.
Activity in the region's currency markets was limited as UK
and U.S. markets were closed for a bank holiday.
In Hungary the NBH left its base rate unchanged at 9.5
percent for a fourth consecutive month but said a cut could come
if sentiment towards the forint improves in a lasting way and if
easing does not threaten financial stability.
"The central bank comments had no impact (on the forint),
the market is very illiquid. If there will be an impact (in the
next days), it can be positive rather than negative," said one
Budapest-based dealer.
"The economy is in recession and a rate cut would have a
beneficial impact on the GDP," the dealer added.
The forint <EURHUF=> was unchanged at 279.78 versus the euro
at 1511 GMT, with weaker-than expected retail sales data having
no impact on the market. []
The global recession has caused economic contraction or
slowdown in Central Europe's export-reliant economies, and
investors watch the signs of recovery which could increase
investor appetite for emerging market assets.
Poland's zloty <EURPLN=>, the worst performer among central
European currencies this year, was slightly down on Monday in a
very thin trade.
The Polish stocks were also down with the main index WIG20
<> falling almost one percent. Other indices in the region
were up 0.0-2.3 percent.
Last week the zloty and forint had led gains with a 3-4
percent rise on higher appetite for emerging European assets but
dealers had warned that the markets remained fragile.
In Poland the central bank is beginning its monthly meeting
on Tuesday and the decision on rates is expected on Wednesday.
Analysts in a Reuters poll expect the bank's Monetary Policy
Council to leave interest rates flat for a second month running
because economic slowdown has so far failed to lower inflation
as the zloty remains weak. []
In the Czech Republic dealers were watching debt markets
after finance minister Eduard Janota said the government would
have to hike borrowing this year to up to 280 billion Czech
crowns ($14.70 billion), from a previously planned 180 billion,
to cover a sharply higher budget gap widened by recession
[].
Dealers said another key factor was comments from central
bankers that Czech rates could fall further due to uncertainty
and continued weakness in the economy.
The Czech crown <EURCZK=> was 0.1 percent down to the euro,
while Romania's leu <EURRON=> was 0.1 up against the common
currency.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.682 26.655 -0.1% +0.27%
Polish zloty <EURPLN=> 4.404 4.398 -0.14% -6.56%
Hungarian forint <EURHUF=> 279.78 279.75 -0.01% -5.8%
Croatian kuna <EURHRK=> 7.3 7.311 +0.15% +0.89%
Romanian leu <EURRON=> 4.168 4.174 +0.14% -3.69%
Serbian dinar <EURRSD=> 94.386 94.567 +0.19% -5.2%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 159bps over bmk*
4-yr T-bond CZ4YT=RR +1 basis points to +184bps over bmk*
8-yr T-bond CZ8YT=RR +1 basis points to +275bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +429bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +326bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +275bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -26 basis points to +846bps over bmk*
5-yr T-bond HU5YT=RR -60 basis points to +767bps over bmk*
10-yr T-bond HU10YT=RR -49 basis points to +642bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1611 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 Gergely Szakacs
and Dagmara Leszkowicz; Editing by Toby Chopra)
