(Adds details, fixed income)
PRAGUE, Oct 1 (Reuters) - Most of Central Europe's
currencies edged up against the euro on Wednesday, although
dealers said the credit crunch has squeezed liquidity and
restricted new money flows into regional assets.
Hungary's forint <EURHUF=> inched up 0.1 percent to 241.4
against the euro by 0911 GMT, while the Polish zloty <EURPLN=>
gained 0.3 percent to 3.377 per euro.
The Czech crown <EURCZK=> was at 24.532 per euro, or down
0.1 percent from Tuesday's domestic close. Croatia's kuna
<EURHRK=> lost 0.2 percent to 7.105 per euro and Serbia's dinar
<EURRSD=> dipped 0.1 percent to 76.728 per euro.
Dealers said regional markets had found a footing after
global sentiment got a boost from hopes U.S. lawmakers could
pass a markets rescue plan this week to unclog credit markets.
But dealers said the escalating credit crunch has meant
lower liquidity and wider spreads this week. "We see more of the
same today," one Prague-based currency trader said.
Rising risk aversion since mid-September, when U.S.
investment bank Lehman Brothers filed for bankruptcy protection,
has hit regional currencies, with the crown down 1.9 percent
since. The forint has lost 1.8 percent and the zloty -- boosted
by its country's euro adoption ambitions -- 1.5 percent.
Investors have been bullish on the zloty and Polish
government aims to adopt the euro in 2012. Another central bank
policymaker said on Wednesday it would need to run tighter
monetary policy to help rein in inflation as a result.
However, a slower economic outlook for the region in the
face of weaker euro zone demand and easing inflation has
reversed appreciation trends for emerging European currencies
since they hit record highs in July.
On Wednesday, purchasing managers' indices in the Czech
Republic and Poland showed a contraction for the third and fifth
consecutive months, respectively. Poland's Finance Ministry also
forecast September inflation likely eased to 4.4 percent
year-on-year from 4.8 percent a month before.
"With demand for labour fading and commodity price pressures
easing globally, the need for additional policy tightening from
(Poland's) central bank is questionable, irrespective of
Poland's euro aspirations," said Lucy Bethell, a currency
strategist at Royal Bank of Scotland.
Polish bonds along with the region were mostly stable on
Wednesday, with yields dipping 3 to 7 basis points, traders
said.
Romania's leu <EURRON=> also edged up 0.5 percent to 3.733
against the euro.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.533 24.510 -0.09% +7.41%
Polish zloty <EURPLN=> 3.377 3.386 +0.27% +6.21%
Hungarian forint <EURHUF=> 241.400 241.520 +0.05% +4.53%
Croatian kuna <EURHRK=> 7.105 7.090 -0.21% +3.02%
Romanian leu <EURRON=> 3.733 3.750 +0.45% -4.27%
Serbian dinar <EURRSD=> 76.728 76.620 -0.14% +2.58%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +2 basis points to 23bps over bmk*
5-yr T-bond CZ5YT=RR 0 basis points to +18bps over bmk*
10-yr T-bond CZ9YT=RR +1 basis points to +32bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +273bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +223bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +181bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +598bps over bmk*
5-yr T-bond HU5YT=RR -6 basis points to +541bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +402bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1111 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 Patrick Graham)
