* Currencies down following drop in stocks
* Forint leads, falling 2 pct vs euro
* Further data darkens regional outlook
* Any announcement on Romania's bailout may move leu
(Adds paras 3-4, 12 on forint fall, updates prices.)
By Dagmara Leszkowicz
WARSAW, March 12 (Reuters) - Emerging European currencies
fell against the euro on Thursday, reversing a recent rally as
sentiment soured, led by the Hungarian market where investors
tested the central bank's (NBH) resolve to defend the forint.
Equities in Europe were retreating, indicating a rise in the
risk aversion which has battered central and eastern European
markets in recent months, while Hungary posted trade figures
suggesting its economic downturn may be steeper than expected.
The forint fell over two percent against the euro from the
opening to 308.31. By 1150 GMT it rebounded to 306.58<EURHUF=>
but it was still weaker by 2.1 percent from late Wednesday.
Poland's zloty <EURPLN=> and the Czech crown <EURCZK=> weakened
0.8 percent and 0.4 percent per euro respectively.
The region's currencies have been tightly correlated as
worries over banks, external financing and growth prompted an
exit of investors, but the forint has been hardest hit due to
Hungary's relatively weak fundamentals.
Hungary posted a trade deficit of 191.6 million euros in
January, data from the Central Statistics Office showed.
Analysts had expected a balanced trade account.
Budapest's central bank has said it would use all tools
available to it to support the forint and dealers said a
speculative reversal of positions by some big foreign players
caused the forint's latest swing.
"(Investors) are testing the levels where the NBH would step
in," one dealer said. "I think they should take decisive step to
hit speculators who beat the forint to trigger a wave of stops."
Central bank Governor Andras Simor said late on Wednesday,
when the forint was near 300, that he was satisfied with the
forint's firming after saying earlier the bank had been active
on the market. []
RATE PLAY
Currencies have reversed sharply from record highs last
summer, and on Wednesday Polish regulators said the country's
firms faced a $5 billion exposure to soured currency derivatives
after the zloty lost a third of its value. []
Gross domestic product data on Wednesday also showed the
economies have entered a more severe downturn than was apparent
just weeks ago as their key export markets in the west collapse
and domestic demand plunges. []
Analysts said the chief driver remained global sentiment
toward risk and emerging markets, but that any indication that
central banks were likely to pause in cutting interest rates
could also have an effect.
"It depends on the hawkishness and action of central banks
in the region," said Simon Quijano-Evans, CEE economist for
broker Cheuvreux. "There doesn't seem to be a meaningful
turnaround in global sentiment yet."
Some dealers said the depreciation trend may end soon as
currencies in the region are strongly undervalued.
"I think that if the zloty stays below 4.65 for some time,
it may signal strong depreciation is about to finish," said
Lukasz Wojtkowiak, FX dealer at Millennium bank in Warsaw.
In Romania, which this week became the third EU member to
request external aid, dealers said the leu <EURRON=> could be
moved near-term by signs of the amount the country plans to get
from the EU, IMF and other financial institutions.
The leu, which has held relatively steady compared with its
peers in recent weeks, was flat at 4.283 per euro.
The bonds market was weaker compared with the previous day
and traders said paper in the region is tracking falling
currencies.
"Due to the falling zloty one may expect a profit taking at
Thursday session," said Tomasz Bielanowicz, trader at PKO BP.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.159 27.042 -0.43% -1.49%
Polish zloty <EURPLN=> 4.639 4.602 -0.8% -11.3%
Hungarian forint <EURHUF=> 306.58 300.13 -2.1% -14.04%
Croatian kuna <EURHRK=> 7.42 7.408 -0.16% -0.74%
Romanian leu <EURRON=> 4.283 4.283 0% -6.27%
Serbian dinar <EURRSD=> 94.458 94.433 -0.03% -5.27%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -25 basis points to 197bps over bmk*
4-yr T-bond CZ4YT=RR -23 basis points to +245bps over bmk*
8-yr T-bond CZ8YT=RR +7 basis points to +305bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +429bps over bmk*
5-yr T-bond PL5YT=RR +4 basis points to +363bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +308bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -20 basis points to +1144bps over bmk*
5-yr T-bond HU5YT=RR -54 basis points to +997bps over bmk*
10-yr T-bond HU10YT=RR -43 basis points to +808bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1250 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz; Editing by Toby Chopra and Patrick Graham)
