(Repeats story published late on Thursday)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, Jan 15 (Reuters) - Central Europe's
currencies weakened on Thursday in the wake of a softer euro
after the ECB cut interest rates, while dealers attributed a
firmer Romanian leu to fresh central bank intervention.
The euro is the region's reference currency and dealers
often take cues from the euro/dollar.
The European Central Bank cut interest rates on Thursday to
match its historic low of 2 percent, prompting the euro to fall
against both the dollar and the yen.
"The most important today was the euro/dollar moves," said
one Prague trader.
Currencies have been hit this week on the back of a fresh
round of data showing a deeper slowdown in the region's
economies, along with falling inflation that widens the scope
for interest rate cuts. []
In Romania, the leu <EURRON=> was 0.3 percent up at 4.29 per
euro, bucking the downward trend as dealers cited a second day
of covert central bank intervention to help the unit, which
might otherwise have hit new lows on poor industry data
[].
"It was an intervention strong enough to compensate the drop
in industrial output," one dealer said.
The Serbian central bank also sold 26 million euros in a
fixing session on Thursday at 93 dinars, but the dinar <EURRSD=>
still lost almost 2 percent.
Losses were led most of the day by the zloty <EURPLN=> in
Poland, where central banker Dariusz Filar said he expected
inflation to fall to target in the second half of this year.
[].
By 1559 GMT, the zloty was 0.9 percent weaker at 4.211 per
euro, and Hungary's forint <EURHUF=> was down 0.3 percent at
279.3 per euro.
Hungarian data on Thursday showed inflation fell more than
forecast to 3.5 percent in December, also bolstering
expectations for a new rate cut next week. []
But dealers remained split as the currency has swung wildly
in the past week, once nearing a historic low above 286.
The central bank has said stability is a concern after the
spreading global financial crisis pushed the country to seek IMF
aid in October. The bank has already cut to 10 percent, erasing
half of an emergency 300 basis point hike from October.
"I think they (the central bank) will take a pause now and
cut again after the market calms down," one dealer said.
The global economic crisis has hammered the region since
late last year on the back of slowing demand in the
recession-hit euro zone.
The switch in focus from inflation to recession fears forced
central banks in eastern Europe to cut rates in successive
moves, adding to bearish pressure on currencies.
The Czech crown <EURCZK=> fell 1 percent in late trade to
27.3 per euro on Thursday, a day after falling to the weak side
of 27 to the euro for the first time since November 2007.
Some central bankers said on Wednesday the economy might be
sliding toward or even below the bank's alternative, pessimistic
outlook showing 0.5 percent growth this year. []
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.29 27.026 -0.97% -1.97%
Polish zloty <EURPLN=> 4.211 4.174 -0.88% -2.28%
Hungarian forint <EURHUF=> 279.3 278.5 -0.29% -5.64%
Croatian kuna <EURHRK=> 7.362 7.327 -0.48% +0.04%
Romanian leu <EURRON=> 4.29 4.301 +0.26% -6.42%
Serbian dinar <EURRSD=> 93.94 92.142 -1.91% -4.75%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -9 basis points to 120bps over bmk*
4-yr T-bond CZ4YT=RR -5 basis points to +122bps over bmk*
8-yr T-bond CZ8YT=RR 0 basis points to +122bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -11 basis points to +318bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +271bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +242bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -19 basis points to +807bps over bmk*
5-yr T-bond HU5YT=RR -24 basis points to +751bps over bmk*
10-yr T-bond HU10YT=RR -24 basis points to +582bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1659 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/Jason
Hovet)
