By Marton Dunai and Dagmara Leszkowicz
BUDAPEST/WARSAW, Nov 23 (Reuters) - Emerging European
currencies were mixed on Friday on the prospect of slower
economic growth and lower interest rates, while the EU's
decision to abandon budget talks failed to move the region,
market watchers say.
Sources told Reuters that EU leaders did not reach an
agreement on a seven-year budget for the bloc, pointing to a cut
in influential EU funding for the region for the coming
'Despite the negotiations fiasco, the market still believes
in an agreement on Greece, and that's why currencies have not
been hit so far,' said Jakub Wiraszka, a dealer at BRE bank in
By 1602 GMT, the Polish zloty had edged down 0.1
percent while the Hungarian forint eased 0.2 percent
and the Romanian leu was virtually flat.
Bonds were little changed and stocks were mixed, with the
bourse in Prague adding 1 percent on the back of a 3
percent rise in shares in power group CEZ, the
region's largest listed company.
Markets expect Poland's central bank to cut interest rates
by a full percentage point within a year, and Hungary's rates
are also seen declining a further 100 basis points by mid-2013
after three rate cuts in the last three months.
Still, Hungarian rates are high enough for now to shelter
the forint on the short term investment opportunity, one dealer
said in Budapest.
'It's safe to invest (in Hungarian assets) on a one-year
horizon with yields as high as they are. Risk is manageable,' he
'Of course, low or zero growth does haunt every country in
the region. We cannot surpass too far the rest of the European
Union. Everybody keeps talking about that.'
The Czech crown added 0.4 percent to 25.325 but
was expected to weaken and test 25.5 in coming days, one dealer
said, due to loose monetary policy. The Czech central bank's
base rate is among the lowest in the world at 0.05 percent.
The bank has said its preferred next step to loosen policy
would be to weaken the crown in the foreign exchange market, but
markets see less risk of this happening this year after recent
falls in the crown.
'There is still some verbal intervention but they have
signalled 25.000 is a significant level so they are probably
happy with these levels right now,' Raiffeisen bank dealer Roman
Bonds remained very illiquid and yields were little changed.
One dealer in Budapest said business would stay scarce at least
until the National Bank of Hungary's rate decision on Tuesday.
Currency Latest Previous Local Local
close currency currency
today in 2012
Czech crown 25.325 25.423 +0.39% +0.87%
Polish zloty 4.108 4.106 -0.05% +8.68%
Hungarian forint 280.07 279.4 -0.24% +12.33%
Croatian kuna 7.556 7.534 -0.29% -0.53%
Romanian leu 4.532 4.532 0% -4.66%
Serbian dinar 112.08 112.8 +0.64% -4.58%
Czech treasury bonds
2-yr T-bond CZ2YT=RR -8 basis points to 27bps over bmk*
7-yr T-bond CZ6YT=RR -2 basis points to +57bps over bmk*
10-yr T-bond CZ10YT=RR -6 basis points to +59bps over bmk*
Polish treasury bonds
2-yr T-bond PL2YT=RR -3 basis points to +367bps over bmk*
5-yr T-bond PL5YT=RR -1 basis points to +331bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +264bps over bmk*
Benchmark is German bond equivalent.
All data taken from Reuters at 1702 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; Editing by Patrick Graham)
Keywords: MARKETS EASTEUROPE/
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