* FX drift weaker, focus turns to next week's rate decisions
* Polish cbank head says still in easing bias
* Bond yields tick higher
(Adds details, fixed income)
By Jason Hovet
PRAGUE, March 20 (Reuters) - Most Emerging European
currencies gave up some recent gains against the euro on Friday
and the zloty fell to a one-week low after Poland's central bank
governor said the country was still in an easing cycle.
The region's central bankers were meeting in Budapest, while
European leaders in Brussels looked set to agree to double the
bloc's crisis funds for rescuing non-euro zone members, as well
as to seek a doubling of International Monetary Fund resources
to help countries hit in the downturn. []
Currencies have lost much of their strong gains of this
month which followed rallies on stock markets. Dealers said
markets had cooled after the U.S. Federal Reserve set plans this
week to buy up government debt, flooding markets with cash.
Investors also awaited a new round of interest rate meetings
in central Europe next week. Hungarian and Czech policymakers
are seen holding rates steady due to their weak currencies,
while Poland is expected to cut 25 basis points. []
Polish central bank governor Slawomir Skrzypek said on
Friday the bank was still in an easing bias. []
The zloty <EURPLN=> dropped 0.3 percent to 4.628 to the euro
by 1033 GMT, paring earlier falls. The Hungarian forint
<EURHUF=> was off 0.1 percent at 301.8 per euro but the Czech
crown <EURCZK=> inched up to 26.85.
Dealers said falling interest rates could weigh on the
zloty. But the market has generally moved more cautiously after
the recent rally from heavy drops since last summer as worries
over central Europe's growth, banks and financing remain.
"Emerging currencies are all moving weaker this morning," a
central European currency dealer in Stockholm said. "We've had a
sharp move (up in recent weeks), but we have seen some selling
in equity markets."
FUNDS BOOST
Bond prices in the region edged lower. In Hungary, the yield
curve has almost flattened out in the past week, while the state
debt management agency is expected to continue buying back
paper.
The agency bought back everything at the short end, and
yields moved as low as 11.70 percent in some cases, a dealer
said. "Whoever wanted to sell already sold to them," the dealer
said. "We will see how long they can keep up the buybacks."
In Romania, the leu was steady against the euro <EURRON=>,
moving in a tight range around 4.29 as markets watched
negotiations with the IMF on an aid package that was seen at
around 20 billion euros. Romania is likely to become the third
EU member to receive external help after Hungary and Latvia.
Outside the bloc, Serbia's central bank held its key policy
rate steady on Friday as it awaits the outcome of talks with the
IMF on a new 3.0 billion euro loan. [] The dinar
currency <EURRSD=> was up a touch at 94.59 to the euro.
Some confusion came late on Thursday when Polish Prime
Minister Donald Tusk said the country wanted to start talks with
the IMF on credit lines.
But Finance Minister Jacek Rostowski later said Poland needs
no IMF help and instead may lend the body $1.5 billion as part
of a larger $75-100 billion European contribution.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.85 26.89 +0.15% -0.36%
Polish zloty <EURPLN=> 4.628 4.616 -0.26% -11.08%
Hungarian forint <EURHUF=> 301.82 301.45 -0.12% -12.68%
Croatian kuna <EURHRK=> 7.441 7.441 0% -1.02%
Romanian leu <EURRON=> 4.291 4.297 +0.14% -6.45%
Serbian dinar <EURRSD=> 94.59 94.64 +0.05% -5.4%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +23 basis points to 233bps over bmk*
4-yr T-bond CZ4YT=RR -4 basis points to +271bps over bmk*
8-yr T-bond CZ8YT=RR +29 basis points to +329bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +13 basis points to +441bps over bmk*
5-yr T-bond PL5YT=RR +10 basis points to +392bps over bmk*
10-yr T-bond PL10YT=RR +6 basis points to +332bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +10 basis points to +1079bps over bmk*
5-yr T-bond HU5YT=RR +24 basis points to +1022bps over bmk*
10-yr T-bond HU10YT=RR +42 basis points to +913bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1134 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 Jason Hovet; editing
by David Stamp)
