* Leu hits another all-time low vs euro on economy woes
* Hungary forint near all-time lows vs Swiss franc
* Analysts say central banks may intervene to support units
BUCHAREST, June 29 (Reuters) - Emerging Europe's currencies
continued to slide lower on Tuesday, knocked by concerns about
the speed of economic recovery and increasing the likelihood
that central banks would intervene to prop up their units.
Concerns about the stability of Romania's government and
depressed economy after a hike in value added tax sent the leu
to a fresh record low against the euro, and dealers expected the
central bank to step in to help stabilise the market.
Hungary's forint remained close to all-time lows versus the
Swiss franc <CHFHUF=>, raising concerns over the country's large
stock of franc-denominated debt. About 95 percent of its private
sector FX loans are denominated in francs.
"It's going to be a bloodbath today," a Budapest-based
dealer said. "EUR/CHF is down to 1.3250, the leu looks horrible,
and the forint is diving along with it.
"If the euro weakens to 1.30 against the franc, we could hit
220 (CHF/HUF) in a massive way," the dealer said. "We need some
more time before that happens, but it looks like that level
attracts it like a magnet."
The leu dropped more than 2 percent on Monday after the
government unveiled plans to raise value added tax to plug a gap
in the budget and secure IMF funding, dealing a blow to its
credibility and raising concerns about economic recovery.
[]
By 0725 GMT the leu <EURRON=> was down a further 0.3 percent
and the forint <EURHUF=> fell 0.5 percent. Poland's zloty
<EURPLN=> fell 0.6 percent and the Czech crown <EURCZK=> edged
0.2 percent lower.
"It looks like markets are pushing central banks to act and
... the regional CenBanks have the ammo to do it," Cheuvreux
analyst Simon Quijano-Evans said in a note.
"Indeed, we need to see some sort of concerted action from
monetary authorities on the FX market. Even one central bank's
action -- ie Romania or Hungary -- would help reduce the
spillover effects."
Romania's central bank has intervened on markets in the past
year to stop excessive weakening or firming, dealers say.
Hungary's central bank said it would not rule out
intervention when the forint was at 15-month highs against
the euro earlier this year. It has not commented now the forint
is falling.
Investors are eyeing two interest rate decisions in the
region on Wednesday, which could both be of greater interest
than usual.
It will be the first time Poland's central bank releases its
inflation projection and markets will closely watch comments
from new governor Marek Belka at his first policy sitting.
[]
Romania's central bank is now seen leaving interest rates
unchanged, rather than cutting, due to inflation concerns
following the decision to raise VAT. []
In the Czech Republic, President Vaclav Klaus will name
economist Kamil Janacek to the central bank board while
appointing board member Vladimir Tomsik as the new vice
governor. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.777 25.716 -0.24% +2.1%
Polish zloty <EURPLN=> 4.167 4.141 -0.62% -1.51%
Hungarian forint <EURHUF=> 287.05 285.54 -0.53% -5.82%
Croatian kuna <EURHRK=> 7.183 7.195 +0.17% +1.76%
Romanian leu <EURRON=> 4.375 4.36 -0.34% -3.15%
Serbian dinar <EURRSD=> 103.81 103.92 +0.11% -7.64%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -5 basis points to 134bps over bmk*
7-yr T-bond CZ7YT=RR -4 basis points to +160bps over bmk*
10-yr T-bond CZ9YT=RR +8 basis points to +157bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -1 basis points to +407bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +392bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +335bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +3 basis points to +549bps over bmk*
5-yr T-bond HU5YT=RR +3 basis points to +526bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +465bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0925 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Sam Cage and Reuters bureaus, Editing by Sonya
Hepinstall)
