(Adds forint drop)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, Jan 19 (Reuters) - The Polish zloty fell
to its lowest since end-2004 on Monday, as poor wage data
cemented monetary easing expectations, while the forint touched
a record low in late trade after an expected interest rate cut.
The zloty <EURPLN=> fell by 1.6 percent from Friday to 4.311
per euro, as dealers said below-consensus wage data
[] and news on Friday that Polish foundry maker
Odlewnie Polskie <ODPL.WA> was filing for bankruptcy because of
currency options were pressuring the unit lower [].
"Poland's December labour market data has come in
meaningfully below consensus, underlining the rapidly
deteriorating macro outlook," said Marcin Mrowiec of UniCredit.
"The really bad numbers are yet to come ... today's data are
yet another confirmation of a need to cut rates significantly;
the sooner the better."
The forint <EURHUF=> extended losses to fall 2 percent to
285.94 per euro and briefly touched an all-time low of 286.75 in
late, illiquid trade. [] The currency had earlier
been mostly flat compared to levels before Hungary's central
bank (NBH) cut rates by 50 basis points [].
The bank said more cuts were on the cards if financial
stability and liquidity allowed [], while analysts
believe forint's weakness may limit the room for more easing as
Hungary faces a significant stock of hard-currency loans.
"It is clear that the NBH wants to continue to bring down
rates as inflation slows and the economy slumps," said Lars
Christensen of Danske Bank.
The Czech crown <EURCZK=> lost 0.9 percent, dragged lower by
zloty's weakness, while Romania's leu <EURRON=> edged down 0.2
percent by 1701 GMT. Dealers said the central bank, which is
said to have intervened to prop up the leu last week was absent
on Monday.
They said some investors feared another intervention,
however, which is why the leu failed to track the region.
Dealers said trade was choppy with the U.S. market closure
for a holiday hitting liquidity. However, investors were eyeing
any signal from U.S. president Barack Obama, who is set to take
office on Tuesday.
"There are high hopes for the measures to be implemented by
the U.S. president and any disappointment could drag markets
even lower," Piraeus Bank said in an afternoon report.
Central Europe's currencies came under selling pressure late
on Friday on the back of rising risk aversion after major U.S.
banks reported huge losses. The dent in sentiment added to a
2009 weakening trend as economic growth dwindles to zero and a
falloff in inflation leads to swifter monetary policy easing.
Analysts expect monetary policy moves to weigh on currencies
in the first half of the year. The Czech bank is also expected
to cut its interest rates next month as economic growth slows
drastically.[]
Romania is seen joining the rate-cutting trend next month
with 25-50 basis points, while Poland is seen slashing another
50 basis points off its key rate this month.
In fixed income markets, bond prices were little changed on
Monday after recent strengthening connected to rate
expectations.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.645 27.388 -0.93% -3.23%
Polish zloty <EURPLN=> 4.311 4.242 -1.6% -4.55%
Hungarian forint <EURHUF=> 285.94 280.3 -1.97% -7.83%
Croatian kuna <EURHRK=> 7.393 7.364 -0.39% -0.38%
Romanian leu <EURRON=> 4.293 4.285 -0.19% -6.49%
Serbian dinar <EURRSD=> 93.83 92.821 -1.08% -4.64%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -28 basis points to 90bps over bmk*
4-yr T-bond CZ4YT=RR -37 basis points to +97bps over bmk*
8-yr T-bond CZ8YT=RR -17 basis points to +97bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -12 basis points to +307bps over bmk*
5-yr T-bond PL5YT=RR -11 basis points to +257bps over bmk*
10-yr T-bond PL10YT=RR -8 basis points to +224bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +745bps over bmk*
5-yr T-bond HU5YT=RR -22 basis points to +697bps over bmk*
10-yr T-bond HU10YT=RR -13 basis points to +574bps over bmk*
*Benchmark is German bond equivalent.
All currency data taken from Reuters at 1810 CET.
All bond data taken from Reuters at 1601 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet and
Marius Zaharia; Editing by Ron Askew)
