(Adds fixed income, detail)
By Dagmara Leszkowicz
WARSAW, Dec 16 (Reuters) - Emerging Europe's currencies
opened weaker on Tuesday, with the Polish zloty leading losses
on FX contract problems and Romania's leu falling on political
concerns and possible intervention.
The Central Europe's currencies have been hit recently by
more poor data and analysts said they may weaken even further in
2009, as they generally outperformed other emerging markets
currencies this year.
"Very weak data from the German economy suggest that export
numbers from CEE will be particularly bad, at least in the first
half of the year," said Bartosz Pawlowski, strategist at TD
Securities in London.
Earlier on Friday, a flash estimate showed the Markit
purchasing managers' index (PMI) for the manufacturing sector in
Germany fell this month to 33.5, its biggest downturn in at
least 12 years. []
The Polish currency <EURPLN=> lost more than 4 percent since
the beginning of December as concerns over loss-making option
positions of the country's companies prompted investors to close
positions on EUR/PLN.
"Risk aversion in the region remains, but the Polish
currency additionally faces problem of those unfortunate
options," said Ernest Pytlarczyk, head of financial market
research at BRE bank.
He said if the zloty weakens to above 4.0 against the euro,
the currency may next test 4.10 and 4.20.
The Romanian leu <EURRON=> were also down, trading slightly
above a 2-month low hit in the previous session after a surprise
resignation of the prime minister nominee. Dealers also said
investors feared central bank intervention.
The head of country's Democrat-Liberal (PD-L) party Emil Boc
won the mandate to form a centre-left government on Monday after
his deputy declined the nomination, fuelling fears of political
rifts and instability.[]
On Monday, the leu fell as low as 3.9600 per euro after the
resignation before rebounding, and dealers said they suspected
central bank intervention.
"While demand for euros persists, investors are wary as they
expect the central bank to intervene ... as it has done in
recent days," said a dealer with a central bank in Bucharest.
Other currencies also weakened, with Hungary's forint
<EURHUF=> 0.4 percent down against the euro and the Czech crown
<EURCZK=> falling to its lowest level since January, tracking
the Polish currency as poor economic outlooks raise investor
concerns.
"The crown follows the zloty, but overall the situation is
the same: corporates are overhedged; an economic downturn is
behind the doors, so nothing (more) to hedge," said a dealer at
a Prague-based bank.
Bonds remained relatively stable, with the Polish paper
yields a touch above closing levels. Dealers said Wednesday's
tender, when the finance ministry offers up to 4 billion zlotys
in bonds, may weaken the papers.
"I think especially long-end of the curve may weaken as
supply is big and foreign investors are not interested in buying
bonds," said a dealer at Warsaw-based bank.
In the Czech Republic, trade on the bonds market were quiet,
with markets awaiting the central bank's rate decision on
Wednesday.
"Market is waiting for the CNB decision tomorrow. We still
call for a 50 bps cut, with consensus mostly concentrated at
this level," Komercni Banka traders wrote in a morning note.
"The cuts should still come despite the current weakness in
the currency; with economy deteriorating faster than previously
forecasted and inflation more than 100bp below the CNB
prediction, we believe deeper cuts would be justified."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 26.323 26.123 -0.77% +0.66%
Polish zloty <EURPLN=> 4.047 3.986 -1.53% -12.4%
Hungarian forint <EURHUF=> 268.39 267.33 -0.4% -6.15%
Croatian kuna <EURHRK=> 7.216 7.184 -0.45% +1.51%
Romanian leu <EURRON=> 3.95 3.929 -0.53% -10.33%
Serbian dinar <EURRSD=> 85.43 86.35 +1.07% -8.47%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +3 basis points to 173bps over bmk*
5-yr T-bond CZ5YT=RR +1 basis points to +130bps over bmk*
10-yr T-bond CZ9YT=RR -10 basis points to +104bps over
bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +5 basis points to +350bps over bmk*
5-yr T-bond PL5YT=RR -12 basis points to +296bps over bmk*
10-yr T-bond PL10YT=RR -7 basis points to +248bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -42 basis points to +771bps over bmk*
5-yr T-bond HU5YT=RR -53 basis points to +703bps over bmk*
10-yr T-bond HU10YT=RR +9 basis points to +513bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0952 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
For related news and prices, click on the codes in brackets:
All emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
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World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus; Writing by Dagmara
Leszkowicz; Editing by Andy Bruce)
