* Czech crown at 5-1/2 month highs, outperforms peers
* Hungary holds interest rates as expected
* Polish and Czech c.banks meet later in the week
(Recasts, updates with Hungary cbank)
By Marius Zaharia and Jason Hovet
BUCHAREST/PRAGUE, June 22 (Reuters) - The Czech crown rose
near its highest level since the start of the year on Monday,
edging past 26 to the euro and outperforming central European
peers as investors sought safer havens in the region.
In Hungary, the forint also outperformed, inching up after
the central bank held interest rates steady at 9.5 percent as
expected, keeping the Hungarian unit's higher yield. []
The crown has jumped more than 3 percent in the past week,
lifted by unwinding of long Polish zloty/crown trades as
investors closed intra-region positions favouring the zloty.
Dealers have said stop losses amid low market liquidity has
added to gains in the crown, which traded just short of a 2009
high of 25.85 to the euro seen on Jan. 6.
By 1223 GMT, the Czech currency <EURCZK=> was bid at 25.984
per euro, up 0.8 percent from Friday's domestic close. The
forint <EURHUF=> was up a touch at 278.54.
"We are seeing foreign sellers (of euros)," said one Prague
trader. "There are some speculative sales, and I think it is a
new story on (the crown as a) safe haven."
The crown <EURCZK=> has typically been seen as less risky
due to the country's lower indebtedness and stronger current
account balance, while an expected rise in Poland's budget
deficit has triggered some concerns [].
The crown and forint traded at multi-year highs against the
Polish zloty. The zloty <EURPLN=> fell 0.7 percent against the
euro to 4.519, while the Romanian leu <EURRON=> traded flat.
The zloty, which has led the region's fall since July 2008
with a 25.7 percent drop, is still seen the top performer over a
12-month horizon on Poland's strong fundamentals, dealers said.
Goldman Sachs said on Friday it was knocked out of its
PLN/CZK trade but maintained the zloty should appreciate above
the crown.
Central European currencies have been weighed down in the
past week by data and comments from policymakers bolstering
expectations for monetary easing.
Hungary kicked off a round of regional central bank
decisions, but is seen as the only one in the region to keep
rates on hold this week, with quarter percentage point cuts
expected in Poland on Wednesday and the Czech Republic on
Thursday. [] []
"The main question will be how they (Hungary's central bank)
assess these concerns overall, and whether they would like to
keep the rate cut an option or they adopt a more cautious
stance," said Gyorgy Barcza, analyst at K&H Bank in Budapest.
Romania is also widely expected to chop 50 basis points off
its 9.5 percent benchmark rate next week. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.984 26.195 +0.81% +2.96%
Polish zloty <EURPLN=> 4.519 4.489 -0.66% -8.94%
Hungarian forint <EURHUF=> 278.54 278.61 +0.03% -5.38%
Croatian kuna <EURHRK=> 7.261 7.27 +0.12% +1.43%
Romanian leu <EURRON=> 4.216 4.214 -0.05% -4.78%
Serbian dinar <EURRSD=> 92.61 92.62 +0.01% -3.38%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +32 basis points to 152bps over bmk*
4-yr T-bond CZ4YT=RR -1 basis points to +176bps over bmk*
8-yr T-bond CZ8YT=RR +8 basis points to +286bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1428 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, Writing by Marius Zaharia and
Jason Hovet, Editing by Ruth Pitchford)
