(Adds fresh details, US data, comments)
By Jason Hovet
PRAGUE/BUDAPEST, Dec 5 (Reuters) - Emerging European
currencies eased on Friday along with the region's stocks, with
the forint posting the biggest losses in the day, and sentiment
was further soured by dismal U.S. payrolls data.
U.S. stocks fell after data showed 533,000 nonfarm jobs were
lost in November, the biggest job reduction since 1974. The
unemployment rate climbed to 6.7 percent, the highest since
1993, confirming a deepening economic downturn.
Hungary's industrial output contracted faster than expected
in October, by an annual 7.2 percent, data showed on Friday
[], indicating that recession is well on its way as
the region's economies take a hit from Europe's sharp slowdown.
"We're entering again 'crisis mood'. It is clear investors
are retreating (from the zloty) for some time now and such a
situation should continue further," said a dealer at
Warsaw-based bank.
"The region's currencies are mostly weakening and the forint
is moving with the region ... this latest U.S. payrolls data
looks very poor," a Budapest-based dealer said.
In Poland, the zloty <EURPLN=> stuck to weak levels, down
about one percent at 3.886 per euro by 1523 GMT and extending
losses seen in the last week. Investors have been unnerved by
news corporates stand to lose billions of euros on FX contracts
made before the zloty fell sharply in October [].
Hungary's forint <EURHUF=> lost 2 percent from Thursday's
close to 265.80 per euro and the Czech crown <EURCZK=> eased 0.8
percent.
Serbia's dinar, the hardest hit of the region's economies in
the recent flight out of emerging markets, has fallen as much as
22 percent since August on external funding worries, but added 2
percent on Friday to bid at 86.35 per euro <EURRSD=>.
The Romanian leu <EURRON=> continued to be disconnected from
the region on Friday, as it has been for the whole week, with
foreign investors mostly on the sidelines, awaiting for new
political developments after Sunday's parliament election.
The market was dominated by locals and commercial orders
from retailers.
"December is the month of (Christmas) presents and low
volumes," said one dealer with a foreign bank. "There is room
for more weakening."
RATE CUT HOPES
Central Europe's currencies have mostly settled into steady
ranges in recent weeks after sharp losses in October and
November as investors shy away from new positions, but lower
liquidity causes temporary spikes, dealers and analysts said.
Expectations are growing that central banks in the Czech
Republic, Poland and Hungary will cut interest rates again this
year after large cuts from European central banks this week.
Hungarian bond yields dropped around 60 basis points on
Thursday mostly on strengthening rate cut expectations but gave
up some of those gains on Friday as the market took a breather.
"I am fairly sure of a rate cut of 100 basis points on Dec.
22 but yields did not go further down today, they climbed 5-10
basis points higher," a Budapest-based fixed income trader said.
"If the forint weakens further, foreigners will buy papers
only cautiously," he added.
The bank hiked rates in an emergency move by 300 bps in
October, but unexpectedly trimmed 50 basis points in November to
put the main rate at 11 percent.
Polish bonds strengthened on Friday on further rate cut
expectations, dealers said.
"The reason is always the same - the direction of further
interest rates is clear. Today's interview with the central
bank's Monetary Policy Council member Jan Czekaj confirmed
that," said a dealer at Warsaw-based bank.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 25.832 25.617 -0.84% +2.51%
Polish zloty <EURPLN=> 3.886 3.849 -0.96% -7.93%
Hungarian forint <EURHUF=> 265.8 260.61 -1.99% -5.12%
Croatian kuna <EURHRK=> 7.178 7.162 -0.22% +2.03%
Romanian leu <EURRON=> 3.849 3.839 -0.26% -7.51%
Serbian dinar <EURRSD=> 86.35 88.108 +2 % -9.64%
All data taken from Reuters at 1619 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Reuters bureaus, writing by Jason Hovet and
Krisztina Than; editing by Stephen Nisbet)
