* Currencies slip amid low liquidity
* Region seen profiting longer term from economic recovery
By Marton Dunai and Kuba Jaworowski
BUDAPEST/WARSAW, Jan 7 (Reuters) - Emerging European
currencies eased on Thursday but analysts said the region's
fledgling economic recovery would cushion losses and help the
market to rebound in coming weeks.
In the immediate term, however, markets are heavily focused
on U.S. labour market data due out on Friday. For market
expectations on the U.S. data please go to: <ECONUS>
The Czech crown <EURCZK=> bucked Thursday's regional trend,
inching up 0.1 percent after data showed November's trade
surplus was above expectations. []
Elsewhere, the Polish zloty <EURPLN=> was down 0.5 percent
against the euro by 1544 GMT, as was the Hungarian forint
<EURHUF=>. The Romanian leu <EURRON=> lost 0.1 percent.
"Market jitters in the past have shown that the forint can
react quite noticeably when sentiment becomes more hostile
towards emerging assets," said Gyorgy Barta, analyst at CIB
Bank.
"If economic conditions continue to improve in the medium
term, convergence players could come back onto the stage."
A Reuters poll released on Thursday showed analysts expect
ex-communist central Europe's main currencies, led by the zloty,
to extend last year's gains in 2010.[]
The crown had been under pressure since the Czech 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 unit. []
Dealers said comments from central bank Vice-Governor
Miroslav Singer that the Czechs would be among the first to
raise interest rates lent support to the crown.
They expect the Czech crown to outperform the region in the
next three months and the Polish zloty to gain the most in the
whole 2010.
The latter economy is the largest among European Union's
ex-communist members, managed to avoid recession and its
fundamentals are seen as strong.
"The Polish economy has resisted the crisis, has strong
fundamentals and the risk aversion on the global markets is
abating," said Marcin Grotek analyst at Raiffeisen Bank Polska.
Earlier this week both Poland and Hungary said their 2009
deficits would be lower than initially expected.
[], []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.289 26.325 +0.14% +0.11%
Polish zloty <EURPLN=> 4.113 4.094 -0.46% -0.22%
Hungarian forint <EURHUF=> 269.92 268.47 -0.54% +0.16%
Croatian kuna <EURHRK=> 7.291 7.291 0% +0.25%
Romanian leu <EURRON=> 4.166 4.16 -0.14% +1.71%
Serbian dinar <EURRSD=> 97.113 97.26 +0.15% -1.27%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -13 basis points to 64bps over bmk*
7-yr T-bond CZ7YT=RR +14 basis points to +104bps over bmk*
10-yr T-bond CZ10YT=RR +4 basis points to +85bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +5 basis points to +388bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +342bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +279bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +548bps over bmk*
5-yr T-bond HU5YT=RR +3 basis points to +501bps over bmk*
10-yr T-bond HU10YT=RR +3 basis points to +428bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1541 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux, writing by Marton Dunai;
Editing by Toby Chopra)
