* Currencies lower in low liquidity after recent gains
* Crown outperforms, trade surplus higher on better exports
* Bonds gain on positive budget news, local demand
(Adds Czech trade, bonds, updates markets)
By Marton Dunai
BUDAPEST, Jan 7 (Reuters) - Emerging European currencies
eased on Thursday, giving back some of recent gains after good
news on the budget front from many countries, with the Czech
crown outperforming slightly as exports stopped shrinking.
The crown <EURCZK=> eased 0.2 percent, less than regional
peers, following data showing November's trade surplus was above
expectations. []
The Polish zloty <EURPLN=> was down 0.4 percent against the
euro by 1058 GMT, as were the Hungarian forint <EURHUF=> and the
Romanian leu <EURRON=>.
The crown had been under pressure since the central bank cut
interest rates to a record low 1 percent last month, but many
strategists say a favourable trade balance and lower dividend
outflows may boost the crown. []
Dealers said comments from central bank Vice-Governor
Miroslav Singer that the Czechs would be among the first to
raise interest rates added support to the crown.
Still, the Czech currency would remain the least attractive
currency in the region, said 4Cast analyst Piotr Matys.
"While we do expect higher interest rates at 1.75 percent at
the end of the year... those looking for high yielding
currencies will not be excited by the Czech koruna," Matys said.
The Romanian leu had far outperformed regional peers on
Wednesday on renewed confidence in financial stability. The leu
gave back some of those gains but is expected to trade between
4.12 and 4.18 against the euro in the short term.
"We still like the RON given relatively high carry (despite
Monday's rate cut), improved current account balance, better
chance of receiving another IMF tranche and some catch-up
potential vs. its CEE peers," UniCredit said in a morning note.
BONDS GAIN
Bonds did not follow the weakening seen in currencies, with
quiet trading in Prague and gains in Polish and Hungarian bonds.
Polish bonds benefited from comments of the deputy finance
minister on the central bank's 2009 profits, which he said could
be as high as 10 billion zlotys and boost budget revenues this
year. []
"The news on the central bank's profit is positive for
debt," said Krzysztof Izdebski, dealer at PKO BP. "The debt
outlook is also boosted by news on KGHM, as it shows
privatisation revenues are to be collected."
The Polish treasury can expect revenues of around 2.1
billion zlotys from the sale of a 10 percent stake in Europe's
No. 2 copper maker KGHM, sources told Reuters. []
Finance Minister Jacek Rostowski also was quoted in Polish
media on Thursday as saying the 2010 budget gap would be below 6
percent of gross domestic product, versus a consensus estimate
of 6.6 percent. []
The 2009 central budget deficit was also lower than the
expected 27.2 billion zlotys, the finance ministry said on
Wednesday, spurring further gains in the zloty.
In Hungary, local demand boosted bonds of all maturities,
dealers said, adding that the long end was in especially heavy
demand as it has been left out of recent rounds.
Yields at a one-year T-bill auction also fell 23 basis
points compared to the last sale two weeks ago. []
Markets in Romania were watching if the finance ministry
tries to bring the yield on 5-year T-bonds below the cut-off
level of 10 percent. Romania plans to sell 500 million lei of
the paper on Thursday, and 4 billion in all of January. <BNR030>
"There is a better sentiment on Romania recently, and the
finance ministry may sell paper with a lower yield," one dealer
said. "I suspect (the ministry) will aim for 9.5 percent."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26.311 26.27 -0.16% +0.03%
Polish zloty <EURPLN=> 4.111 4.095 -0.39% -0.17%
Hungarian forint <EURHUF=> 269.6 268.57 -0.38% +0.28%
Croatian kuna <EURHRK=> 7.291 7.288 -0.04% +0.25%
Romanian leu <EURRON=> 4.17 4.154 -0.38% +1.62%
Serbian dinar <EURRSD=> 96.86 96.87 +0.01% -1.01%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR 0 basis points to +77bps over bmk*
7-yr T-bond CZ7YT=RR +16 basis points to +106bps over bmk*
10-yr T-bond CZ10YT=RR +2 basis points to +84bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +386bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +344bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +278bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +550bps over bmk*
5-yr T-bond HU5YT=RR +1 basis points to +498bps over bmk*
10-yr T-bond HU10YT=RR +1 basis points to +425bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1158 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaux, writing by Marton Dunai;
Editing by Toby Chopra)
