BUDAPEST, Sept 29 (Reuters) - Eastern European currencies
showed a mixed picture on Tuesday morning, with the safe-haven
crown gaining but others edging lower as some analysts say
equity markets might start reversing earlier sharp gains.
Romania's leu <EURRON=> edged a hair lower ahead of a rate
decision at the central bank, which is widely expected to
deliver a cut of 50 basis points to 8.0 percent.
"Market expectations are for a 50 bp cut, as the environment
remains disinflationary," UniCredit said in a morning note.
"However, the bank did not auction any cash in the repo
auction yesterday morning, something that may point to an even
more aggressive rate cut today."
Dealers say a cut will likely not send the leu lower as
covert central bank interventions are propping it up.
The Czech crown <EURCZK=> was 0.1 percent stronger at 0745
GMT after a Monday holiday. The Polish zloty <EURPLN=> slid 0.3
percent, while the Hungarian forint <EURHUF=> was flat.
"We have seen some glimpses of a correction on equity
markets which could become a negative factor, but the crown is
less sensitive to this," said Michal Brozka, an analyst at
Raiffeisen Bank in Prague, adding the bank still expects the
crown to end the year on a weaker note at around 26 to the euro.
Regional equity markets were also mixed, with Warsaw's WIG
index down 0.3 percent at 0749 GMT, while Prague's PX was 1.6
stronger and Budapest's BUX up 0.2 percent.
Moody's Investors Service cut Lithuania's ratings for the
second time this year and warned of the deep recession's
pressures on government finances in the Baltic nation.
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The downgrade did not appear to have a palpable impact on
the region's currency markets.
The forint remained in the same tight range around 270
versus the euro seen in the last weeks despite a central bank
rate cut of 50 basis points to 7.50 percent on Monday.
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"The market expected this," a dealer in Budapest said.
"Something extraordinary will have to happen for the forint to
leave the current 269-271 range."
In the wake of the predictable rate move, the market is now
trying to figure out the likely pace of future cuts.
"Looking ahead, we still envisage one more cut," Danske Bank
said in a note. "But we also think that the markets are too
aggressively priced for further monetary easing."
The Polish zloty is likely to move in a range today due to a
lack of impulses, a dealer in Warsaw said.
"I expect the zloty to move in a range of 4.18-4.22," he
said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.187 25.205 +0.07% +6.22%
Polish zloty <EURPLN=> 4.201 4.19 -0.26% -2.05%
Hungarian forint <EURHUF=> 269.31 269.27 -0.01% -2.14%
Croatian kuna <EURHRK=> 7.265 7.269 +0.06% +1.38%
Romanian leu <EURRON=> 4.202 4.2 -0.05% -4.46%
Serbian dinar <EURRSD=> 92.727 92.67 -0.06% -3.5%
All data taken from Reuters at 0945 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Marton Dunai; editing by Stephen Nisbet)
