BUDAPEST, Sept 14 (Reuters) - Poland's zloty fell more than
two percent at the open on Monday, extending last week's losses
after news its budget deficit was likely to double next year,
and pressuring other central European currencies.
By 0738 GMT, the zloty <EURPLN=> had recovered some of its
losses to trade down 1.12 percent from its Friday close but was
still past a key level of 4.2 on the back of last week's poor
news flow and weaker global sentiment.
"In the past weeks we wrote about EURPLN above 4.20 and this
scenario came to life this morning after the worsening of
sentiment on Asian markets on the anniversary of Lehman
Brothers' fall," wrote BZ WBK bank in a morning note.
"The zloty will continue to be under pressure from negative
fiscal news."
Poland last week laid out a planned 2010 budget deficit at
twice this year's projected shortfall, while its current account
surprise by sinking to a deficit of 565 million euros in July
from a surplus of 459 million in June.
Traders also blamed the recent retreat on expectations of a
large conversion of zloty into euro by Dutch insurer Eureko from
an expected hefty dividend from Polish PZU.
Eureko and Poland's treasury have been at odds over PZU for
a decade, but both sides have signalled they were nearing a deal
that could include a large dividend payout.
"The weakening came from abroad, but the budgetary issues
make us fall more than the region," said Rafal Benecki, senior
economist at ING Bank Slaski.
"The U.S. bourse was down on Friday evening and the zloty is
now adjusting to it, some stop-losses are also on. I think the
rest of the day hinges on the stock exchanges."
Other regional currencies also suffered, with the forint
<EURHUF=> shedding about half a percent and the Czech crown
<EURCZK=> easing 0.25 percent.
"The zloty got hammered this morning, probably due to the
lack of liquidity, which also dragged the forint lower," a
currency dealer said, adding that the 275 level was a key
support, which could limit losses in the forint.
The leu <EURRON=> was also down 0.3 percent.
Romania's finance ministry auctions 1.1 billion lei in
six-month treasury bills on Monday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.5 25.435 -0.25% +4.91%
Polish zloty <EURPLN=> 4.214 4.167 -1.12% -2.35%
Hungarian forint <EURHUF=> 273.71 272.05 -0.61% -3.71%
Croatian kuna <EURHRK=> 7.328 7.328 0% +0.5%
Romanian leu <EURRON=> 4.277 4.264 -0.3% -6.14%
Serbian dinar <EURRSD=> 93.33 93.42 +0.1% -4.13%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -9 basis points to +189bps over bmk*
7-yr T-bond CZ7YT=RR -3 basis points to +185bps over bmk*
10-yr T-bond CZ10YT=RR -2 basis points to +182bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +390bps over bmk*
5-yr T-bond PL5YT=RR -2 basis points to +344bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +293bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -2 basis points to +650bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +586bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +501bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0938 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Reuters bureaus, writing by Gergely Szakacs;
editing by Patrick Graham)
