CEE currencies weaken

Markets are showing signs of worry that a slowdown in euro zone economies will significantly affect the CEE region. A resurgent dollar over the past month has further pressured the currencies, as have worries over the fallout of the Russia-Georgia conflict.

The Polish złoty fell 0.4 percent to zł.3.347 per euro on Thursday, dropping with other currencies in the region despite hawkish words from the National Bank of Poland's Monetary Policy Council on Wednesday, after it left interest rates unchanged. Bond yields stabilized after rising initially after the comments.

"Despite the hawkish comments, only one [rate] hike is possibly on the cards," a bond dealer was quoted by Reuters as saying.

The Hungarian forint lost 0.8 percent on Thursday, after the previous day's announcement by Prime Minister Ferenc Gyurcsany that he would step down if the Hungarian Parliament didn't pass his tax reform bills and budget in the fall.

The Czech crown dropped to CZK24.72 per euro on Thursday and dealers expected more weakness after the currency broke above the CZK24.6 resistance level, with the next level seen at CZK24.85. (Reuters)