(Recasts with leu fall, adds details, previous PRAGUE)
BUCHAREST, Oct 2 (Reuters) - Central European currencies
took a beating on Thursday, with the Romanian leu leading
losses, as the U.S. Senate's approval of a plan to ease the
credit crunch failed to lift investor sentiment in the region.
Emerging assets have been hit by the freezing up of global
credit markets, which has prompted traders and investors to sell
their holdings of such assets and hoard cash.
The leu <EURRON=> fell 1.7 percent to a eight-month low of
3.8108 versus the euro by 1216 GMT, while the Czech crown
<EURCZK=> fell 0.8 percent to 24.721 per euro.
A dealer with a foreign bank in Bucharest said the leu had
suffered more than its regional peers due to a need by firms to
buy euros that was not offset by normal incoming market flows.
"All emerging markets are being hit by a rebounding dollar,"
the dealer said.
"The (Romanian) market is smaller, and because retailers
need hard currency for imports ahead of the winter season and
Romania's aggregate demand is higher than elsewhere, this is
felt (here) more than in the rest of the region."
The Hungarian forint <EURHUF=> lost 0.5 percent to 243.79
per euro and Poland's zloty <EURPLN=> lost 0.35 percent to 3.407
against the euro.
Regional currencies have retreated since mid-September when
U.S. investment bank Lehman Brothers filed for bankruptcy
protection, starting a new phase in the year-old credit crisis.
Late on Wednesday, the U.S. Senate passed a rescue deal, but
investors looked nervously to a further vote expected in the
lower house, which unexpectedly on Monday rejected the plan to
buy up bad debts.
Central European money markets have been little affected by
the turmoil, and central European government officials this week
sought to reassure markets that their countries were insulated
from the financial market crisis.
However, central European currencies have also been hit by
evidence regional economies were slowing due to weaker euro zone
demand.
The Polish government's plans to adopt the euro in 2012 had
turned investors bullish on the currency, given that
preparations for euro entry would likely require tighter
monetary policy.
However, a voting member of the Polish central bank said
earlier on Thursday that there may not be any need for more rate
hikes at least for a while.
The Czechs were the first to reverse policy in August,
cutting interest rates a quarter percentage point in the face of
a weakening economy. On Thursday, Czech officials said the
economy will slow more than previously expected [].
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.714 24.535 -0.73% +6.73%
Polish zloty <EURPLN=> 3.403 3.397 -0.18% +5.49%
Hungarian forint <EURHUF=> 243.69 242.75 -0.39% +3.62%
Croatian kuna <EURHRK=> 7.117 7.1 -0.24% +2.86%
Romanian leu <EURRON=> 3.81 3.742 -1.82% -6.42%
Serbian dinar <EURRSD=> 76.738 76.632 -0.14% +2.57%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -9 basis points to 17bps over bmk*
5-yr T-bond CZ5YT=RR -21 basis points to -2bps over bmk*
10-yr T-bond CZ9YT=RR -25 basis points to +9bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +277bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +222bps over bmk*
10-yr T-bond PL10YT=RR -3 basis points to +180bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -7 basis points to +601bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +550bps over bmk*
10-yr T-bond HU10YT=RR -14 basis points to +397bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1526 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Reuters bureaus, writing by Marius Zaharia,
editing by Stephen Nisbet)
