(Updates throughout)
PRAGUE, Sept 3 (Reuters) - Emerging European currencies
edged lower versus the euro in late trade on Wednesday, led by
the Czech crown and Polish zloty, as dealers said a pause in the
dollar's rally shifted trade to technical flows.
In Hungary, dealers said political tension there would
continue to weigh due to uncertainty over the 2009 budget as
opposition parties have rejected the Socialist minority
government's tax proposals. The forint <EURHUF=> stabilised with
a 0.2 percent drop from Tuesday's domestic close to 238.8 per
euro.
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"Apparently the forint cannot really weaken to beyond 239.50
against the euro," one dealer said. "Political news is strongly
influencing the market. However, we can see neither panic nor
strong optimism; what moves the forint directly is the
euro/dollar cross."
The region has been battered in the past month as investors
shifted to the greenback due to euro zone growth concerns.
Persistent tension over Georgia has also heightened
investors' wariness, with losses for central European currencies
between 3 to 5 percent since the start of August.
The Czech crown <EURCZK=> led late losses, dropping 0.5
percent to 24.813 to the euro by 1502 GMT, and dealers point to
strong resistance around 24.9 per euro which has limited drops.
"When we near 24.9, loads of corporate selling orders come,"
a Prague dealer said, explaining why the currency had not
weakened past that level yet.
Poland's zloty <EURPLN=> fell 0.5 percent to 3.367 to the
euro, while Romania's leu <EURRON=> dipped to 3.534 from 3.522.
The Croatian kuna <EURHRK=> dipped a touch to 7.135 and the
Serb dinar <EURRSD=> dropped to 76.77 per euro from 76.5.
Analysts have warned the firmer greenback and growth
concerns in the euro zone, central Europe's biggest trade
partner, will keep regional currencies on a downward path until
next year.
"The potential for rapid productivity growth relative to
Western Europe should support a trend appreciation in emerging
Europe currencies over the medium term," Capital Economics'
emerging Europe economist Neil Shearing wrote in note.
"But in the near-term, the risks to forex markets appear to
lie on the downside."
========================Market Snapshot========================
Currency Latest Previous Local Local
close currency currency
change change
today in
2008
Czech crown <EURCZK=> 24.813 24.683 -0.53% +6.36%
Polish zloty <EURPLN=> 3.367 3.350 -0.51% +6.49%
Hungarian forint <EURHUF=> 238.750 238.320 -0.18% +5.58%
Croatian kuna <EURHRK=> 7.135 7.133 -0.03% +2.61%
Romanian leu <EURRON=> 3.534 3.522 -0.34% +1.29%
Serbian dinar <EURRSD=> 76.770 76.500 -0.35% +2.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +9 basis points to 7bps over bmk*
5-yr T-bond CZ5YT=RR -4 basis points to +17bps over bmk*
10-yr T-bond CZ9YT=RR -6 basis points to +40bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -10 basis points to +214bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +208bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +187bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +12 basis points to +511bps over bmk*
5-yr T-bond HU5YT=RR +2 basis points to +471bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +379bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1702 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by David Stamp, Victoria Main and Hans Peters)
