(Adds details, fixed income, updates prices)
WARSAW, Nov 19 (Reuters) - Poland's zloty dropped almost one
percent on Wednesday, leading a fall in central European
currencies after the region's stocks gave up early gains and the
U.S. dollar strengthened.
At 1048 GMT the Polish currency <EURPLN=> was 0.9 percent
weaker against the euro at 3.856, while Hungary's forint
<EURHUF=> was 0.5 percent down at 271.4.
Central European currencies have come under renewed pressure
this week due to growth concerns in the region's export-heavy
economies and some countries' high exposure to foreign credit.
Stocks have also been hit, adding to pressure on the currencies,
which tend to weaken when global appetite for risk falls.
"U.S stocks were a bit up but it was an insignificant gain
and was not supportive for the European currencies," said a
Warsaw-based dealer. "The trend on the dollar appreciation is
clear."
Central Europe's stock markets gave up early gains of nearly
one percent to trade flat on Wednesday.
Other currencies fell, with the Romanian leu <EURRON=>
weakening around 0.3 percent and the Czech crown <EURCZK=> also
off a little.
The Serbian dinar <EURRSD=> fell 1.3 percent to 87.5 to the
euro one day after the central bank sold 50 million euros on the
interbank market to ease a steep loss in the currency.
Analysts at BPH bank warned that fresh selling on stocks
could again put pressure on currencies. "The American indices
are close to crucial support levels from the end of October and
exceeding those levels could cause another wave of a selloff and
result in further zloty weakening," they wrote.
RATE CUTS SOON?
The bonds market was mixed on Wednesday with Hungarian and
Czech paper edging down in thin trade, while Polish bonds held
steady.
Dealers said the bond market is betting on a Polish interest
rate cut soon, although it is still unclear if this will come at
a meeting next week. []
"It seems the market expects the (monetary policy) council
to cut rates already in November ... Overall sentiment is good,"
said Marek Kaczor, a dealer at PKO BP in Warsaw.
The Czech and Slovak central banks have so far been the only
ones to ease monetary policy in the region, while Hungary and
Serbia have raised rates to support their currencies.
Some analysts say declining currencies will limit the scope
for looser policy in Poland or Romania.
The zloty and forint have been hardest hit in recent months,
shedding 12.6 percent and 10.5 percent, respectively, since Oct.
1, while the crown is off 3.5 percent and the leu is down 0.3
percent, helped by a more active central bank.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.675 25.673 -0.01% +3.1%
Polish zloty <EURPLN=> 3.856 3.821 -0.92% -7.1%
Hungarian forint <EURHUF=> 271.4 270.00 -0.52% -7.34%
Croatian kuna <EURHRK=> 7.11 7.111 +0.01% +2.96%
Romanian leu <EURRON=> 3.837 3.825 -0.31% -7.17%
Serbian dinar <EURRSD=> 87.51 86.39 -1.3% -11.11%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +19 basis points to 166bps over bmk*
5-yr T-bond CZ5YT=RR +1 basis points to +143bps over bmk*
10-yr T-bond CZ9YT=RR +5 basis points to +92bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +409bps over bmk*
5-yr T-bond PL5YT=RR -13 basis points to +353bps over bmk*
10-yr T-bond PL10YT=RR -6 basis points to +286bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -44 basis points to +1074bps over bmk*
5-yr T-bond HU5YT=RR -54 basis points to +1030bps over bmk*
10-yr T-bond HU10YT=RR +10 basis points to +621bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1148 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz; editing by David Stamp)
