* Forint leads currencies lower after Monday's sharp gains
* Stock markets also fall
* Markets look for more after Monday's cbank actions
* Romanian leu steady, dealers say central bank intervened
(Recasts with new comments, prices)
By Sandor Petor and Dagmara Leszkowicz
WARSAW/BUDAPEST, Feb 24 (Reuters) - Hungary's forint led a
fall by Central European currencies on Tuesday as the units gave
up some of the gains posted after Monday's unprecedented joint
verbal intervention by central banks in the region.
Regional central bankers launched a push on Monday to
support their currencies that sank to multi-year or record lows
in the past week, saying their sharp drop did not reflect their
economic fundamentals and was overdone. []
But the rally proved short-lived with gains of more than 3
percent nearly wiped out by Tuesday, and dealers and analysts
said the banks may need to back up the words by action.
By 1501 GMT the Hungarian forint<EURHUF=D2> weakened by 1.55
percent against the euro to 301.20 and both the Polish zloty
<EURPLN=> and the Czech crown<EURCZK=> were down by 0.51 percent
at 4.67 and 28.395, respectively.
"Verbal intervention is unable to cause a trend change, risk
aversion remains high and liquidity low in the markets," Gergely
Suppan, an analyst at DZ Bank said. "The most which can be
achieved is that the pace of currency weakening is slowed."
The forint fell to an intraday low of 303.95 after a news
agency report quoted Prime Minister Ferenc Gyurcsany as saying
after meeting EU Commission President Jose Manual Barroso in
Brussels that the Hungarian economy was in trouble.
Government spokesman David Daroczi said Gyurcsany's comments
about the difficulties of the world economy were mistranslated
in the report.
"He was speaking in general about global difficulties,"
Daroczi told Reuters. "He said the world was in trouble and
Europe was in trouble and in times of difficulty, action was
needed."
Hungary's central bank kept interest rates on hold at its
meeting on Monday, pausing after a series of rate cuts. Central
banks in the region have been reducing their rates for months to
help their economies hit by the global crisis.
"The next issue to watch is the Polish central bank meeting
tomorrow," said Suppan. "More warnings from the banks in the
region (over exchange rate weakness) would not be surprising."
Raffaella Tenconi of Wood & Co. said weakening economic
fundamentals and continuing uncertainty over E.U.-wide policy
responses to the crisis would prevent a significant recovery of
currencies in the region.
The currencies have been hammered by sinking economic
outlooks and rising worries over central Europe's exposure to
foreign credit that is drying up, which has knocked the region
sharply off record highs seen over the summer.
The zloty has lost almost a third of its value since August,
creating losses for Polish companies that had bet on more
appreciation through currency options. The sinking currencies
have also raised borrowing costs for borrowers that sought
cheaper foreign currency loans in recent years.
In Romania, the leu <EURRON=> was steady. Dealers said the
central bank probably intervened in the market.
It also received support from comments by Finance Minister
Gheorghe Pogea who told Reuters that the country may seek a deal
with the EU and the International Monetary Fund even if extra
cash were not necessarily needed [].
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 28.395 28.25 -0.51% -5.78%
Polish zloty <EURPLN=> 4.67 4.646 -0.51% -11.88%
Hungarian forint <EURHUF=> 301.2 296.54 -1.55% -12.5%
Croatian kuna <EURHRK=> 7.503 7.38 -1.64% -1.84%
Romanian leu <EURRON=> 4.281 4.282 +0.02% -6.23%
Serbian dinar <EURRSD=> 94.15 94.44 +0.31% -4.96%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +29 basis points to 238bps over bmk*
4-yr T-bond CZ4YT=RR -13 basis points to +241bps over bmk*
8-yr T-bond CZ8YT=RR -5 basis points to +306bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +439bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +370bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +313bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -20 basis points to +1184bps over bmk*
5-yr T-bond HU5YT=RR -53 basis points to +1044bps over bmk*
10-yr T-bond HU10YT=RR -42 basis points to +868bps over bmk*
*Benchmark is German bond equivalent.
All 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 Dagmara
Leszkowicz; Editing by Andy Bruce/Victoria Main)
