* FX may change little until year's end
* Polish rates seen flat, Greece's rating cut neutral
(Releads, adds analyst quote)
By Adrian Krajewski
BUCHAREST, Dec 22 (Reuters) - Central European currencies
were little changed on Tuesday and traders said they expected
them to stay close to their current levels until the end of the
year as many have already met their 2009 trading targets.
Analysts see Poland's interest rate decision expected on
Wednesday as a done deal -- the key rate will stay at its
all-time low of 3.5 percent.
Also Moody's decision to cut Greece's rating following
similar moves by Standard and Poor's and Fitch did not make
waves on Tuesday as most investors expected.
At 1504 GMT, Poland's zloty <EURPLN=> was up 0.2 percent on
the day, Hungary's forint <EURHUF=> was 0.2 percent stronger,
while the Romanian leu <EURRON=> was a touch weaker.
"I'd rather expect the zloty to stabilise at the levels
we're now at. The time between Christmas and New Year's Eve
should be calm," said senior economist at BPH Bank in Warsaw
Monika Kurtek.
Kurtek said many traders may have met the trading targets
set for them by their employers and with profits already booked
they have now little incentive to engage in trading.
"The (zloty, the Czech crown and the Hungarian forint) tend
to move together and it's sometimes even difficult to tell which
one is tracking which, so I expect also these currencies to
stabilise in the coming days," she added.
Dealers expect currencies to move in tight correlation with
core markets, although low liquidity due to the holiday season
may exacerbate moves.
Markets are readying for Romania's confidence vote on
Wednesday [], hopeful it will show a months-long
political deadlock is nearing an end. Approval looks all but
guaranteed since Boc's coalition has five votes more than the
236-seat majority needed.
Markets expect rates to remain unchanged in Poland, after a
smaller than expected rate cut in Hungary on Monday,
[] and see a cabinet unveiled by Romania's
designated Prime Minister Emil Boc on Sunday getting parliament
approval.
In Czech Republic, the crown <EURCZK=> was slightly weaker,
as policymakers said on Monday the country's alignment with the
euro zone worsened in the economic crisis and Czechs should not
set an entry target date for now. []
Meanwhile, Standard and Poor's affirmed the Czech sovereign
rating at 'A', keeping a stable outlook, despite a worsening
budget. [].
WATCHING RATES
Turnover in bond market was very low and yields were little
changed from their Monday closing levels, despite Hungary's
surprise rate cut by 25 basis points to 6.25 percent, after four
successive half percentage point cuts in the past four months
and a 100 basis points cut in July.
The move signalled caution after a recent weakening of the
forint and uncertainties about the 2010 budget outlook,
particularly in view of elections in April or May next year.
Elsewhere, Romania is expected to resume its monetary easing
cycle once its deal with the International Monetary Fund is
brought back on track.
Monetary easing is expected to have come to an end in the
Czech Republic as well, after the central bank surprisingly cut
rates to a new record low of 1 percent last week.
[]
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.31 26.244 -0.25% +1.68%
Polish zloty <EURPLN=> 4.186 4.197 +0.26% -1.7%
Hungarian forint <EURHUF=> 274.55 274.34 -0.08% -4.01%
Croatian kuna <EURHRK=> 7.275 7.285 +0.14% +1.24%
Romanian leu <EURRON=> 4.216 4.215 -0.02% -4.78%
Serbian dinar <EURRSD=> 96.333 96.09 -0.25% -7.11%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -3 basis points to 76bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +92bps over bmk*
10-yr T-bond CZ10YT=RR -8 basis points to +73bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +585bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +536bps over bmk*
10-yr T-bond HU10YT=RR -4 basis points to +471bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1544 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaux, Writing by Marius Zaharia,
Editing by Ruth Pitchford)
