By Sebastian Tong
LONDON, May 29 (Reuters) - Eastern European currencies rose
on Thursday after a surprise 15-percent revaluation of the
Slovakian crown against the euro, while emerging stocks advanced
on better-than-expected U.S. economic data.
Slovakia's late Wednesday move to revalue its crown
<EURSKK=> ahead of the country's planned 2009 entry to the euro
zone, powered the currency to a record high and also spurred the
currencies of other euro zone aspirants.
"The Slovakian decision is a short-term positive for all the
currencies in the region because investors will speculate that
this is a precedent for countries joining the European Union,"
said Beat Siegenthaler, Chief Strategist Emerging Markets at TD
Securities.
"For countries that are entering the euro zone, it means the
European Central Bank has a lot of flexibility and will allow
stronger currency entry points if the market is pushing for it."
Hungary's forint was 0.73 percent up to a five-year high of
241.21 against the euro <EURHUF=>, prompting the country's
finance minister to say that the surge was temporary and due to
international, rather than local, factors. []
At 1030 GMT, the Polish zloty <EURPLN=> was 0.22 percent
firmer while Romania's leu <EURRON=> gained 0.5 percent.
Analysts had expected Slovakia to revalue its crown peg to
the euro but were surprised by the early timing and the size of
the adjustment, which at a revised central parity of 30.1260 per
euro, jumped past the previous record historical trading levels.
[]
The Slovak crown hit a high of 30.095 against the euro
before easing back to 30.24, 0.91 percent higher than the
previous session.
The Ukrainian hryvnia <UAH=> was the notable exception among
its regional currency peers, slipping 1.88 percent down to trade
at 4.80 against the dollar.
Ukraine's central bank was seen bidding for dollars on
Thursday, after a six-day break. The country's monetary
policymakers have rowed publicly after a decision by the central
bank board to revalue the currency rate to the dollar.
INFLATION FOCUS
Local currencies are broadly firming amid expectations that
central banks will raise interest rates to fend off rising
inflationary pressures.
Russia's central bank said it may let its rouble appreciate
against its dollar/euro currency basket and would raise key
rates in the coming months. []
A Polish monetary policymaker was quoted as saying that the
country's interest rates should rise by 25 basis points in June
[] while South Africa's central banker on Wednesday
called for "drastic measures" to bring down inflation
[].
South Africa's rand, which has lost more than 10 percent of
its value against the dollar <ZAR=> so far this year, firmed
0.70 percent to 7.62.
"The rand has reacted positively because rates are going
higher but for the economy as a whole it is not a very positive
outlook. There are fundamental concerns regarding politics,"
said TD Securities' Siegenthaler.
The country's stocks <.JTOPI> dipped 0.45 percent to their
lowest levels in two weeks, with state-owned utility Eskom's
warning that South Africa's electricity crisis would last for
years adding to investor uncertainty over the leadership of
President Thabo Mbeki in the aftermath of the recent outbreak of
anti-immigrant violence.
Emerging stock markets were broadly higher with the
benchmark index <.MSCIEF> rising 0.82 percent to 1,205.32,
boosted by gains in Asian markets and an upbeat report on new
orders for U.S. manufacturing goods.
Emerging sovereign debt spreads <11EMJ> narrowed 3 bps to
trade at 248 bps over U.S. Treasuries.
(Additional reporting by Sarah Marsh, editing by David
Christian-Edwards)
