* Central bankers verbally intervene to lift FX
* Currencies firm on c.bank talk, better global sentiment
* Hungary leaves interest rates unchanged
* Region's monetary easing trend seen paused
* Poland sticks to euro plans
(Recasts with Hungarian rate, c.banker comments)
By Marius Zaharia and Jason Hovet
BUCHAREST/PRAGUE, Feb 23 (Reuters) - The Polish zloty, Czech
crown and Hungarian forint jumped by about 1 percent after
central bankers in the region said in a coordinated verbal
intervention that recent falls were overdone.
Hungary's central bank left rates unchanged at 9.5 percent,
marking a likely pause or reversal in much of emerging Europe's
monetary policy easing cycles as looser rates have added to
swiftly depreciating currencies already hurt by a sinking
economic outlook. []
Central Europe's central banks took the unprecedented step
of joint verbal intervention to support their region's
currencies on Monday, saying their sharp drop did not reflect
their economic fundamentals. [] []
"All central banks in the region are concerned at the speed
of their currency depreciation," said Paul McNamara, emerging
markets fund manager at Julius Baer.
"The Poles have been particularly complacent and the Czechs
to a lesser degree. But the last two weeks have been a wake-up
call," he added.
By 1320 GMT, the forint <EURHUF=> rose 3.6 percent since
Friday to the strong side of 300 per euro, and the Polish zloty
<EURPLN=> gained 3.4 percent. The Czech crown <EURCZK=>
added 2.5 percent, while Romania's leu <EURRON=> traded even.
Currencies were also helped by a media report that said the
U.S. government could raise its stake in Citigroup to as much as
40 percent, which lifted stocks and weakened the dollar.
[]
Markets had clawed back some losses last week to cap a
rollercoaster five days that saw new multi-year or record lows
as worries over emerging Europe's foreign debt exposure grew.
The steep falls ratted western banking stocks, prompted
policymakers to verbally step in, and many strategists called
the rapid declines overdone. [] []
Poland had converted EU funds to prop up the zloty last
week, while Hungary's prime minister asked the central bank last
week to explore "unconventional" means to stem forint losses.
The weak currencies have caused rising principals and
monthly payments for households and businesses in Hungary,
Romania and Poland that sought cheaper foreign currency loans in
the past -- but give small relief to exporters that have seen
demand for their goods sink in the recession-hit euro zone.
Volatile currencies and rising budget deficits in the wake
of the global economic crisis have also put doubt on
government's ambitions to adopt the euro zone's single currency.
A Czech deputy finance minister said a doubling of the deficit
would push euro entry to beyond 2014. []
In Poland -- which aims to join the euro zone the soonest
after central Europe's smallest state Slovakia switched to euros
this year -- a deputy finance minister said the country could
enter the testing ground ERM-2 by early June. []
[]
Polish companies have been hurt badly by wrong-way bets the
zloty would continue to rise from record highs last summer.
[] The unit has been among the worst-performing
emerging currencies since, and has lost 10.3 percent this year.
The forint is down 10.2 percent in 2009, while the crown is
off 4.7 percent and the leu 6.1 percent.
Prime Minister Donald Tusk said on Friday the worst is past
for the zloty [], but some analysts disagreed.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 28.075 28.774 +2.49% -4.71%
Polish zloty <EURPLN=> 4.589 4.747 +3.44% -10.33%
Hungarian forint <EURHUF=> 293.35 303.93 +3.61% -10.16%
Croatian kuna <EURHRK=> 7.501 7.48 -0.28% -1.81%
Romanian leu <EURRON=> 4.276 4.278 +0.05% -6.12%
Serbian dinar <EURRSD=> 94.558 94.78 +0.23% -5.37%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +14 basis points to 231bps over bmk*
4-yr T-bond CZ4YT=RR +10 basis points to +215bps over bmk*
8-yr T-bond CZ8YT=RR -3 basis points to +298bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1521 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
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(Reporting by Reuters bureaus, writing by Marius
Zaharia/Jason Hovet, editing by Andy Bruce)
