BUDAPEST, Oct 16 (Reuters) - Eastern European currencies
took a breather from recent gains on Friday, with uncertainty
over how a political stalemate in Romania will play out weighing
on a region still facing substantial budget headaches ahead.
The Polish zloty <EURPLN=> and the Hungarian forint
<EURHUF=> each eased 0.3 percent, after this week's gains of 1.5
percent, while the Czech crown <EURCZK=> fell 0.2 percent. That
compared to a strong opening for European stocks, which tends to
support appetite for risk and the region's emerging currencies.
The leu, which had weakened to 7-month lows in the wake of
the political turmoil, was steady on Friday, but analysts said
weakness in Asian emerging markets was also weighing on the
whole region.
Romanian President Traian Basescu nominated respected
central bank adviser Lucian Croitoru as prime minister on
Thursday, in a move likely to meet stiff opposition in
parliament and prolong a government crisis, analysts say.
The opposition, which controls over half of the legislature,
say they will oppose Croitoru in parliament, which has final say
under Romanian law. []
"The Romanian situation is still a little bit in flux," a
dealer in Budapest said.
"The market has pretty much accepted that there won't be a
new prime minister until after the presidential elections in
December. (But) all in all, the mess there does not warrant the
leu's current weak levels."
For Friday, dealers expect rangebound trading, with little
market moving data expected out of the region. Poland will
publish September wages data at 1200 GMT, with analysts pegging
the figure's annual growth at 2.9 percent.
Warsaw took a blow to its privatisation plans -- key to
easing debt supply and stresses on the bond market next year --
when Germany's RWE <RWEG.DE> backed out of purchasing
state-owned utility ENEA <ENEA.WA>.
But the Poles have done well on cutting the budget gap in
recent years and Finance Minister Jacek Rostowski said the
government would systematically reduce the shortfall from 2011
after it balloons to around 7 percent of GDP next year.
"The fiscal outlook appears somewhat better than the
government's outlook. Although some fiscal deterioration is
likely in 2010, government debt should easily stay below 55
percent," Barclays analysts wrote after a visit to Poland.
"Our confidence in the zloty has increased, and we continue
to envisage an appreciation against the euro to 4.00 in 3 months
and 3.80 in 12 months. There seems to have been a setback to the
plans to sell Enea, but political support for the privatisation
program seems high and the pipeline of transactions is large."
Dealers said that the current technical readout shows strong
barriers against a break out higher for the region's currencies.
"Maybe if the euro strengthens past 1.50 to the USD," a
Budapest-based dealer said. "Maybe then we could break out of
this range. But I do not expect that today."
The forint shrugged off data showing continued decline in
the Hungarian construction sector in August. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.843 25.803 -0.15% +3.52%
Polish zloty <EURPLN=> 4.203 4.19 -0.31% -2.09%
Hungarian forint <EURHUF=> 267.55 266.88 -0.25% -1.5%
Croatian kuna <EURHRK=> 7.24 7.257 +0.23% +1.73%
Romanian leu <EURRON=> 4.287 4.286 -0.02% -6.36%
Serbian dinar <EURRSD=> 93.17 93.043 -0.14% -3.96%
All data taken from Reuters at 0912 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Marton Dunai; editing by Patrick Graham)
