BUCHAREST, Feb 19 (Reuters) - Central European currencies
clawed back some of this week's steep losses early on Thursday,
as expectations for more sales of Polish EU funds hit home and
officials talked up currencies for a second day.
The region's currencies have been pummelled by poor growth
outlooks and worries about high foreign debt reliance in some
countries, but got a boost from a defence started on Wednesday
by policy makers [].
Dealers said the zloty was likely to continue to improve as
investors expect the finance ministry to renew Wednesday's sales
on the currency market bolstered by comments from Finance
Minister Jacek Rostowski. []
Asked whether the ministry would sell more euro on the
market, Rostowski told reporters: "At some point yes."
At 0854 GMT, the zloty <EURPLN=> had gained 1.7 percent at
4.701 per euro. Dealers in Hungary and Romania said the zloty's
strengthening helped the forint <EURHUF=> and the leu <EURRON=>
gain 0.6 and 0.4 percent, respectively.
Local players also pointed to gains for the stock market as
evidence of recovering interest in local assets. Warsaw's blue
chip index <> was up almost 5 percent on the day.
The Czech central bank's vice-governor Miroslav Singer also
said he could not rule out more verbal intervention after he
said on Wednesday weakness of the currency could lead to higher
interest rates while cuts were out of question. []
He also said the latest economic decline should not cause
local banks serious problems, after two rating agencies said
earlier this week emerging European banks and their Western
owners could suffer in the global recession.
The Czech crown <EURCZK=> was 0.6 percent firmer, with a
boost from Singer's comments.
"His words are having an impact for now on the market," a
Prague trader said. "The market was caught a bit long (euro) so
we are seeing a good correction right now."
The zloty, the region's hardest hit currency this year,
bounced on Wednesday after a ruling party official said Poland
had started talks on joining the pre-euro ERM-2 mechanism, while
the government converted euros from EU funds on the market.
Hungary was also looking for "unconventional means" to prop
up the forint.
"Yesterday's move of the government could be easily called a
masterpiece. I think it was a really insignificant amount of
money, but this move affected the market psychologically," said
one Warsaw-based dealer.
Romania is eyeing International Monetary Fund for aid in the
crisis and Serbia said it could boost its IMF package to $2
billion. The World bank said more help from the European Union
to support central and eastern Europe was needed [].
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 28.691 28.864 +0.6% -6.75%
Polish zloty <EURPLN=> 4.701 4.779 +1.66% -12.47%
Hungarian forint <EURHUF=> 301.21 303.02 +0.6% -12.5%
Croatian kuna <EURHRK=> 7.473 7.427 -0.62% -1.45%
Romanian leu <EURRON=> 4.258 4.276 +0.42% -5.72%
Serbian dinar <EURRSD=> 94.718 94.488 -0.24% -5.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +5 basis points to 157bps over bmk*
4-yr T-bond CZ4YT=RR +5 basis points to +225bps over bmk*
8-yr T-bond CZ8YT=RR +35 basis points to +222bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +411bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +341bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +298bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +24 basis points to +993bps over bmk*
5-yr T-bond HU5YT=RR +19 basis points to +882bps over bmk*
10-yr T-bond HU10YT=RR +21 basis points to +716bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0954 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia;
Editing by Patrick Graham)
