* FX mixed as mkt digests rate comments, decisions
* More weakening likely, say dealers
* Czech finmin says crown undervalued
* Polish cbank does not rule out future fx intervention
(Adds fixed income, detail)
By Sandor Peto and Dagmara Leszkowicz
BUDAPEST/WARSAW, Feb 26 (Reuters) - The zloty trimmed losses
on Thursday and Central European currencies were rangebound as
investors digest a flurry of comments by decision makers on the
past few months' currency depreciation trend.
The zloty<EURPLN=> firmed against the euro, also pulling up
other currencies in the region, after Polish central bank
governor Slawomir Skrzypek said the bank might intervene in the
currency market to support the zloty in certain conditions.
[]
Market participants said most central banks in the region
were unlikely to intervene if currencies which rebounded this
week do not return to the heavy swings seen earlier this month.
The units moved in relatively tight ranges on Thursday.
The zloty and the Czech crown<EURCZK=> were flat against the
euro at 1229 GMT at 4.695 and 28.36, respectively, Hungary's
forint<EURHUF=> firmed 0.4 percent to 300.1 and the Romanian
leu<EURRON=> gained 0.1 percent to 4.285.
But dealers and strategists said the units would remain
under pressure as the global crisis hits the region's
export-heavy economies and concerns persist over their reliance
on foreign financing.
"The trend (of weakening currencies) hasn't changed really
so the recent strengthening could be a short-term correction,"
said Sylwester Brzeczkowski, dealer at ABN Amro in Warsaw.
If the currencies continue to slide, a key question is what
governments and central banks in the region are ready to add to
Monday's coordinated verbal intervention by central banks in the
region to prop up the currencies.
Czech Finance Minister Miroslav Kalousek said late on
Wednesday that the government was considering all possible tools
to help the undervalued crown.[]
But Wednesday's 25 basis point interest rate cut in Poland
sowed confusion, highlighting the dilemma of all central banks
in the region which have been cutting rates to help the ailing
economies but are worried lower interest rates -- which also cut
the premium paid for held assets -- could fuel more currency
weakness.
"The central bank comments referring to further rate cuts
weakened the Polish unit (on Wednesday), which counters Monday's
coordinated regional central bank statement," Hungarian MKB Bank
said in a statement.
Hungary's central bank kept its rates on hold at its meeting
early this week, pausing in its earlier monetary easing cycle
due to concerns over the forint's weakness which also poses
risks to the loan portfolio quality of domestic banks.
But the woes of the economy maintain pressure on the bank to
cut interest rates further. Rate setter Julia Kiraly said there
were downside risks to its forecasts for growth, which already
predict a recession in 2009 and 2010 [].
The Polish central bank has lowered borrowing costs by a
total of 200 basis points in the current easing cycle, bringing
the key interest rate to 4.0 percent.
However Wednesday's cut was not as sharp as the previous
ones, as the council pointed to recent zloty weakening and
concerns over its volatility. []
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 28.36 28.37 +0.04% -5.67%
Polish zloty <EURPLN=> 4.695 4.692 -0.06% -12.35%
Hungarian forint <EURHUF=> 300.01 301.12 +0.37% -12.15%
Croatian kuna <EURHRK=> 7.4 7.387 -0.18% -0.47%
Romanian leu <EURRON=> 4.285 4.289 +0.09% -6.32%
Serbian dinar <EURRSD=> 93.683 93.849 +0.18% -4.49%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -9 basis points to 240bps over bmk*
4-yr T-bond CZ4YT=RR -10 basis points to +236bps over bmk*
8-yr T-bond CZ8YT=RR -10 basis points to +297bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1329 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Sandor Peto and
Dagmara Leszkowicz; editing by Stephen Nisbet)
