(Updates throughout)
PRAGUE, Aug 21 (Reuters) - Emerging European currencies
closed mixed against the euro on Thursday, with the Czech crown
ending higher after shaking off a central banker's comments
suggesting interest rates might be cut again.
Czech central bank board member Robert Holman said on
Thursday another cut in interest rates could not be ruled out
this year, echoing comments from fellow board members yesterday.
Holman's comments sent the crown temporarily lower on
Thursday, until large London sell orders pushed the market
higher, dealers said.
"(Interest rates) are not the main issue," a Prague trader
said, adding he expected rates to stay unchanged for now. "We
are still struggling with the threat of high inflation."
The Czech crown <EURCZK=> rose 0.4 percent to 24.295 by 1512
GMT.
It has dropped six percent from the record high of 22.925
per euro it hit on July 21, the day before central bankers
warned the strong crown threatened to lead to an undershooting
of its inflation target.
In Hungary, the forint remained strong, and was returning to
a firming trend, dealers said, especially as the dollar's own
firming trend against the euro looked to be slowing.
"The bullish trend is unchanged," one dealer said. "The
central bank has said several times that they are ready to hike
interest rates if the inflation target is threatened, while the
dollar's firming (against) the euro seems to be losing steam and
that is an important factor for emerging market currencies."
The euro is the main reference for regional currencies, and
dealers frequently take their cue from euro/dollar moves. The
dollar's recent rebound has helped knock central and eastern
European currencies off record highs recorded in July.
Hungary's forint <EURHUF=> was trading at 233.81 to the euro
compared with last week's lows of 240 per euro. The Polish zloty
<EURPLN=> edged up 0.1 percent to 3.303 per euro.
Romania's leu <EURRON=> fell to 3.525 a euro from 3.519, and
the Serb dinar <EURRSD=> rose 0.2 percent to 76.2 as dealers
said carry trade activity picked up in late trade.
The Croatian kuna <EURHRK=> eased slightly to 7.167 to the
euro from 7.163 after hitting record levels in early trade, and
dealers said it should hold around this level before easing
after the summer tourist season.
*************************MARKET SNAPSHOT************************
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 24.295 24.383 +0.36% +8.31%
Polish zloty <EURPLN=> 3.303 3.307 +0.12% +8.26%
Hungarian forint <EURHUF=> 233.810 233.370 -0.19% +7.53%
Croatian kuna <EURHRK=> 7.167 7.163 -0.06% +2.18%
Romanian leu <EURRON=> 3.525 3.519 -0.17% +1.54%
Serbian dinar <EURRSD=> 76.200 76.342 +0.19% +3.25%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -11 basis points to -5bps over bmk*
5-yr T-bond CZ5YT=RR -7 basis points to +1bps over bmk*
10-yr T-bond CZ10YT=RR -1 basis points to +29bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -7 basis points to +218bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +198bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +183bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -13 basis points to +442bps over bmk*
5-yr T-bond HU5YT=RR -1 basis points to +422bps over bmk*
10-yr T-bond HU10YT=RR -13 basis points to +354bps over bmk*
*Benchmark is German bond equivalent.
Currency data taken from Reuters at 1712 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Swaha Pattanaik)
