(Repeats story published late on Thursday)
* Forint hits record low against euro
* Crown, zloty give up early gains as stocks dip, dlr firms
* Romanian leu only unit to resists falls
By Dagmara Leszkowicz and Sandor Peto
BUDAPEST/WARSAW, March 5 (Reuters) - Hungary's forint hit a
record low to the euro on Thursday, as a fall in global risk
appetite hit Central European currencies and the head of the
European Central Bank said there should be no loosening of terms
for moving towards the euro.
Half percentage point interest rate cuts by the ECB and the
Bank of England (BoE), which increased the premium investors get
for holding Central European assets, had little impact on the
currencies.
Some dealers said comments by ECB chief Jean-Claude Trichet
that euro zone entry rules will not be loosened to help Central
European euro aspirants may have contributed to weakening in
afternoon trade.[]
But others said the main factor was the dollar's jump above
1.25 versus the euro.
"The whole region is falling due to risk aversion, because
of the falls by stock markets," one dealer said.
"For a couple of days people (have) differentiated between
currencies, but that cannot last for a long time, the whole
region will be lumped together again," the dealer added.
The forint<EURHUF=>, which hit a record low at 213.90 to the
euro, traded at 311.72 at at 1535 GMT, weaker by 1.1 percent
from Wednesday.
The Czech crown<EURCZK=> weakened 1.7 percent against the
euro to bid at 27.85, the zloty <EURPN=> shed 0.7 percent to
4.72, while the leu firmed 0.2 percent to 4.274.
Gains for the crown and zloty in recent days had hinted that
investors were starting to single out the currencies of
countries with weaker fundamentals, like Hungary, for
punishment, but on Thursday markets were moving as one again.
A Reuters poll of analysts showed that the currencies would
rebound from their losses only in more than six months' time and
that they are expected to move together despite differing
fundamentals.[]
CROWN DEAL OVER
The currencies have been falling for months due to fears of
recession and concern that the region may fall into a funding
vacuum due to the global financial crisis.
The Czech crown firmed earlier this week, lifted also by
speculation that French drugs maker Sanofi-Aventis <SASY.PA> was
buying crowns to pay for its 70 percent buyout of shares in
Czech generics drug maker Zentiva <>, which it
succeeded in last month.
"It's a bit crazy... and volatility is high right now," a
Prague-based dealer said. "It could be this (Zentiva) order has
finished... but nobody knows."
Analysts have said falling interest rates to combat sinking
economies in central Europe has accelerated the fall of
currencies to multi-year or record lows this year.
Hungary halted its own rate cuts last month and Czech rate
setters signalled that easing was off the cards.
Polish central bank Governor Slawomir Skrzypek, however,
reiterated his call for further monetary easing after the ECB
and BoE rate cuts, and said Poland required no IMF support like
other countries including Hungary.[]
Romania has also started talks with the IMF on a possible
deal.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.85 27.37 -1.72% -3.94%
Polish zloty <EURPLN=> 4.72 4.686 -0.72% -12.82%
Hungarian forint <EURHUF=> 311.72 308.37 -1.07% -15.45%
Croatian kuna <EURHRK=> 7.413 7.393 -0.27% -0.65%
Romanian leu <EURRON=> 4.274 4.281 +0.16% -6.07%
Serbian dinar <EURRSD=> 94.418 94.28 -0.15% -5.23%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +23 basis points to 257bps over bmk*
4-yr T-bond CZ4YT=RR -3 basis points to +258bps over bmk*
8-yr T-bond CZ8YT=RR -13 basis points to +312bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -21 basis points to +1213bps over bmk*
5-yr T-bond HU5YT=RR -52 basis points to +1072bps over bmk*
10-yr T-bond HU10YT=RR -37 basis points to +877bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1635 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; Writing by Dagmara
Leszkowicz/Sandor Peto; Editing by Patrick Graham)
