* Hungarian budget deficit rise adds uncertainty
* Polish budget financing seen under pressure
* Czech unemployment dips in September
* Hungary bonds ease, tracking forint
(Adds bonds, updates markets)
BUDAPEST, Oct 8 (Reuters) - Emerging European currencies
were mixed on Friday, with the forint extending losses after
budget data on Thursday showed Budapest must keep an iron grip
on fiscal policy in the months ahead.
At 1028 GMT, the forint <EURHUF=> was 0.5 percent weaker
versus the euro, while the Polish zloty <EURPLN=> was down 0.2
percent. The Czech crown <EURCZK=> and the Romanian leu
<EURRON=> were both up 0.1 percent.
Hungary said on Thursday that its budget deficit <HUDEF=ECI>
grew in September to 125 percent of the full-year target, and
analysts said a very tight fiscal policy was needed to meet the
year-end target. []
One dealer said the size of the deficit was adding an
element of uncertainty to the market, though the forint's recent
retreat against the euro was mainly driven by technical factors.
"It was a bit overdone at the 269 levels, so there was a
(negative) correction and global sentiment has also turned a bit
for the worse," a Budapest-based currency dealer said. "There
isn't much juice to fuel further gains today, in my view."
"There is some uncertainty in the market regarding the
deficit, because this 125 percent (of the full-year target) is a
lot, but this is just a very minor uncertainty."
The centre-right government, which took office in May, has
pledged to meet this year's budget deficit target of 3.8 percent
of gross domestic product, as agreed under a financing deal with
the International Monetary Fund and the European Union that
expired this month.
Hungarian debt followed the forint's slide to a limited
extent, with yields rising 6-9 basis points, a dealer said.
However, more than 300 billion forints worth of Hungarian
bonds mature next week and the large amount probably eases any
extra selling pressure, he said.
Polish bonds traded little changed on Friday.
POLISH BUDGET UNDER PRESSURE
Poland's deficit stood at 39.5 billion zlotys at the end of
September, better than the original budget schedule, as spending
is proceeding more slowly than planned. []
Still, fiscal policy continued to worry investors, dealers
said.
"Many countries have serious budget problems, and Poland is
no exception," said Jakub Wiraszka, dealer at BRE bank in
Warsaw.
"The recent sudden sell-off of state-owned assets, even
though it didn't affect the zloty so far, is definitely not
supportive for the unit."
He said it looked like Poland was desperately seeking to
collect cash from privatisation to cut its 2010 borrowing needs.
EU accounting rules prevent Poland from using privatisation
income to count towards reducing its deficit, but the cash will
help Warsaw to cut its borrowing needs.
Poland has raised about half the targeted amount from asset
sales this year. It still hopes to sell a controlling stake in
power producer Enea <ENAE.WA>, worth $1.8 billion, by year-end
after four groups placed bids this week. []
In the Czech Republic, one of the region's better-performing
economies, unemployment dipped to 8.5 percent of the workforce
in September, data showed on Friday. <CZ/ECON04> <CZ/ECON15>
<ECONCZ>. []
The Romanian leu <EURRON=> was also marginally weaker in
thin trading, and dealers said there was a lack of interest in
trading the unit because of rising political risk as the
government tries to pass an IMF-backed pension reform bill. They
said the market was also worried that the central bank could
intervene in the market again. Dealers say the bank has been
intervening regularly to support and curb the leu since late
2008.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.471 24.501 +0.12% +7.55%
Polish zloty <EURPLN=> 3.985 3.976 -0.23% +2.99%
Hungarian forint <EURHUF=> 275.23 274 -0.45% -1.77%
Croatian kuna <EURHRK=> 7.315 7.315 0% -0.08%
Romanian leu <EURRON=> 4.266 4.27 +0.09% -0.67%
Serbian dinar <EURRSD=> 105.8 105.85 +0.05% -9.38%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to +80bps over bmk*
7-yr T-bond CZ7YT=RR -2 basis points to +95bps over bmk*
10-yr T-bond CZ9YT=RR -3 basis points to +95bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +380bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +356bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +315bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +7 basis points to +551bps over bmk*
5-yr T-bond HU5YT=RR +6 basis points to +511bps over bmk*
10-yr T-bond HU10YT=RR +4 basis points to +444bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1228 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Gergely Szakacs;
Editing by Tim Pearce and Susan Fenton)
