* Units rebound as Swiss cbank says buys foreign currencies
* Forint, zloty, crown firm 3 pct, erase early deep losses
(Recasts with FX rebound)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, March 12 (Reuters) - Emerging European
currencies firmed on Thursday, with Hungary's forint and
Poland's zloty reversing sharp losses after the Swiss central
bank (SNB) sold francs and cut interest rates.
The Swiss move boosted central Europe's markets on the
prospect that it might give relief to hundred of thousands in
Hungary and Poland that have borrowed in Swiss francs or euros
and have suffered as those currencies have strengthened.
"I think the (region's) market is driven by the
interventions in euro-Swiss. That's giving strength through the
whole market," a central European currency trader in Stockholm
said. "The cross in Swiss-zloty or Swiss-forint is quite
important for the local banking (due to foreign currency
loans)."
The Swiss franc tumbled after the SNB announcements.
Dealers said a retreat by the yen <JPY=> after
better-than-expected U.S. retail data also helped currencies in
emerging markets, while sentiment in equity markets in the world
also improved.
Dealers in Budapest and London were split over whether the
Hungarian central bank had intervened in the market over the
past few days to help the forint which has firmed from record
lows hit at 317.45 on Friday.
The bank said it would start to channel EU funds into the
market and was ready to use its entire monetary policy tool kit
to help the forint which had fallen to levels which pose a
threat to financial stability in the long term.
NBH Governor Andras Simor said on Tuesday that the bank was
active in the currency market, although no dealer contacted by
Reuters was able to say they had actually seen it make a deal.
The bank does not comment on whether it actually intervenes.
Hungary's forint <EURHUF=>, which led the losses of Central
European currencies earlier when it fell more than 1 percent,
was 0.3 percent firmer on the day at 299.33 against the euro by
1423 GMT. It hit an intra-day low at 308.31.
Poland's zloty <EURPLN=> and the Czech crown <EURCZK=> both
firmed 0.3 percent against the euro, to 4.587 and 26.956,
respectively.
The region's currencies have been sliding for months due to
concern over the reliance of these economies on exports and
foreign financing, and the forint has been worst hit due to the
relatively weaker fundamentals of the country.
ECONOMIC OUTLOOK GLOOMY
The leu <EURRON=> did not join the swings of the other
currencies on Thursday. It was steady at 4.281 against the euro
on the second day of Romania's negotiations on a potential
rescue package with the International Monetary Fund.
The leu showed little reaction to trade data, released
earlier on Thursday, which showed the trade deficit shrinking
60.3 percent on the year in January and signalled Romania's main
economic headache was adjusting. []
It was also unaffected by comments from Finance Minister
Gheorghe Pogea that Romania could have economic growth of
between -1 percent and +1.5 percent this year, down from an
official estimate of 2.5 percent.
Economic figures continue to depict a gloomy outlook for the
region's economies, weighing on currencies.
Hungary posted a trade deficit of 191.6 million euros in
January, compared with analysts' forecast for a balanced trade
account, and the figures indicating deepening recession
contributed to the forint's early plunge.
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."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.956 27.042 +0.32% -0.75%
Polish zloty <EURPLN=> 4.587 4.602 +0.33% -10.29%
Hungarian forint <EURHUF=> 299.33 300.13 +0.27% -11.95%
Croatian kuna <EURHRK=> 7.43 7.408 -0.3% -0.87%
Romanian leu <EURRON=> 4.281 4.283 +0.05% -6.23%
Serbian dinar <EURRSD=> 94.488 94.433 -0.06% -5.3%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -22 basis points to 200bps over bmk*
4-yr T-bond CZ4YT=RR -21 basis points to +247bps over bmk*
8-yr T-bond CZ8YT=RR +17 basis points to +316bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +432bps over bmk*
5-yr T-bond PL5YT=RR +6 basis points to +365bps over bmk*
10-yr T-bond PL10YT=RR +5 basis points to +310bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -16 basis points to +1148bps over bmk*
5-yr T-bond HU5YT=RR -52 basis points to +999bps over bmk*
10-yr T-bond HU10YT=RR -41 basis points to +810bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1523 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)
