(Adds details, fixed income, byline)
By Jason Hovet
PRAGUE, Jan 21 (Reuters) - The Polish zloty and Hungarian
forint led emerging European currencies higher on Wednesday,
rebounding from lows on profit-taking, but the mood stayed
cautious as the outlook for the region's economies darkens.
Recent data has pointed to a deeper slowdown in central
Europe's economies as the region struggles with falling demand
for its goods from a weakening euro zone, bolstering the case
for deep monetary policy easing, which has hung on currencies.
The Polish zloty <EURPLN=> firmed 0.4 percent to 4.325 to
the euro by 0959 GMT, but still was at more than 4-year lows.
Hungary's forint <EURHUF=> edged 0.4 percent up to 283.5 to the
euro, bouncing back from a record low above 288 hit on Tuesday.
Hungarian bond yields dipped along with the stronger forint.
"There is some small risk rally. But the picture has not
changed," said a Prague trader. "It is still buy dips, and we
can see some short term recovery in the region but I would not
overestimate it."
The Czech crown <EURCZK=> gained 0.3 percent to 27.645 per
euro after weakening near the 28 level on Tuesday, which it has
not passed since August 2007.
In Romania, the leu <EURRON=> avoided regional weakness on
Tuesday due to central bank intervention, and was up 0.4 percent
on Wednesday, while Croatia's kuna <EURHRK=> was a tad stronger
but some dealers expect the central bank there to step if recent
weakening continued.
"This looks like a short relief rally in line with the
region. Let's see how long it lasts," said a dealer with a
foreign bank in Bucharest. "It's just profit taking."
Central European stock markets all fell 2-4 percent,
tracking losses of western peers as worries over the banking
sector deepened.
Data on Tuesday showing a worse than expected 4.4 percent
fall in Polish output last month was the latest indicator to
stoke concern in emerging European economies.
On Wednesday, Zbigniew Hockuba, a member of the Polish
central bank's management board, said the bank was going to
lower its current 2009 growth projection of 2.6 percent, but did
not say by how much. []
Speaking in Vienna, Czech central bank Governor Zdenek Tuma
said growth this year will be lower than assumed in the bank's
October forecasts. Other policymakers last week said the bank's
pessimistic, alternative outlook that assumes growth of 0.5
percent is starting to be fulfilled. []
Romania's central bank Deputy-Governor Cristian Popa said at
the same conference that the Romanian economy will avoid a
contraction in 2009. []
Central banks in the region have already started cutting
interest rates to counter sagging economies, and Romania is seen
joining the trend next month.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.645 27.74 +0.34% -3.23%
Polish zloty <EURPLN=> 4.325 4.34 +0.35% -4.86%
Hungarian forint <EURHUF=> 283.58 284.75 +0.41% -7.06%
Croatian kuna <EURHRK=> 7.38 7.405 +0.34% -0.2%
Romanian leu <EURRON=> 4.297 4.314 +0.4% -6.58%
Serbian dinar <EURRSD=> 93.979 94.328 +0.37% -4.79%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +8 basis points to 104bps over bmk*
4-yr T-bond CZ4YT=RR -11 basis points to +92bps over bmk*
8-yr T-bond CZ8YT=RR +2 basis points to +102bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -5 basis points to +745bps over bmk*
5-yr T-bond HU5YT=RR -4 basis points to +710bps over bmk*
10-yr T-bond HU10YT=RR -6 basis points to +532bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1109 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet, editing
by Victoria Main)
