(Recasts with new prices, comments.)
BUDAPEST/BUCHAREST, Dec 29 (Reuters) - Central European
currencies eased on Monday, led by the leu <EURRON=> which was
weighed down by concerns over Romania's current account and
budget deficits.
The Polish zloty <EURPLN=> posted losses as companies
continued to close hedging positions, while in Serbia the
central bank sold euros again to support the dinar <EURRSD=>.
Currencies in the export-reliant region have been hit hard
in the past months by risk aversion caused by the global
financial crisis, concerns over recession in their main export
markets and continuing central bank interest rate cuts.
The leu was bid at 4.058 per euro at 1440 GMT, weaker by 2.4
percent from its levels before the Christmas holidays and
slightly off 4-year lows hit earlier in the day at around 4.07.
Dealers said mainly importers bought euros, but concern
about Romania's ability to finance a bloated trade deficit and a
potentially rising budget shortfall contributed to the
currency's weakness.
"There are fears about the economy, that the (budget)
deficit will be much higher than expected," said one dealer at a
foreign bank in Bucharest.
"Some stop-losses were triggered after the leu broke through
4 but not that much, the market is very thin."
The zloty hit three-and-a-half-year lows at 4.21 to the euro
before rebounding, but at 1440 GMT it was still weaker by 0.93
percent from pre-Christmas levels at 4.122 to the euro.
Companies continued to close option deals struck earlier
this year when the zloty was strengthening.
The currency also lost some support after the Polish central
bank last week delivered its largest rate cut in six years,
slashing its main interest rate by 75 basis points to 5 percent,
and analysts expect further monetary easing in the region.
Hungary's central bank reduced its own rates by 50 basis
points last week, but its base rate remains high at 10 percent.
"I don't know why the forint shrugs off what is happening in
the region. I would not dare to promise that this will remain
unchanged," one Budapest-based dealer said.
The forint <EURHUF=D2> was bid at 266.19, weaker by 0.15
percent against the euro.
The Czech crown <EURCZK=> was also relatively resilient,
weaker by 0.35 percent at 26.463, even though central bank
Governor Zdenek Tuma was quoted as saying he saw room to cut
rates by as much as 2.25 percentage points -- which is the
current level of Czech rates [].
Elsewhere, the dinar shed 1.59 percent to 88.627, even
though the Serbian central bank sold 22.3 million euros,
continuing its repeated interventions, to tame the losses of the
currency as companies buy foreign currencies.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 26.463 26.37 -0.35% +0.13%
Polish zloty <EURPLN=> 4.122 4.084 -0.93% -14.48%
Hungarian forint <EURHUF=> 266.19 265.8 -0.15% -5.28%
Croatian kuna <EURHRK=> 7.341 7.306 -0.48% -0.2%
Romanian leu <EURRON=> 4.058 3.963 -2.4% -13.35%
Serbian dinar <EURRSD=> 88.627 87.237 -1.59% -12.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +9 basis points to +183bps over bmk*
5-yr T-bond CZ5YT=RR -5 basis points to +151bps over bmk*
10-yr T-bond CZ9YT=RR +17 basis points to +138bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -39 basis points to +777bps over bmk*
5-yr T-bond HU5YT=RR -50 basis points to +720bps over bmk*
10-yr T-bond HU10YT=R R +7 basis points to +554bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1540 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Sandor Peto; Editing
by Ruth Pitchford)
