(Adds forint drop, rating)
By Jason Hovet
PRAGUE, Jan 23 (Reuters) - The Hungarian forint fell to an
all-time low on Friday, and the Polish zloty slid to its weakest
since September 2004 as investors soured towards an emerging
European region where growth is dissipating fast.
The Czech crown <EURCZK=> weakened past 28 per euro for the
first time since August 2007 in early trade, triggering stop
losses that added to its 1 percent fall, dealers said.
[]
A rash of poor economic data in the past weeks has pointed
to a sharp slowdown in central Europe's ex-communist economies
as demand from the euro zone collapses, and policymakers across
the region have said they would slash growth forecasts further.
Central banks have cut interest rates to counter sagging
growth outlooks and are expected to ease further, putting more
pressure on currencies already hurt by investors cashing out of
emerging markets.
The Hungarian forint <EURHUF=> slipped 1.5 percent, touching
a new low of 290 per euro as investors sold higher-yielding
currencies. The weak currency also put some pressure on the bond
market.
"This is shorting ahead of the weekend, the Turkish and the
Polish currencies have fallen too," one dealer said.
Dealers also cited unconfirmed market rumours that an
international rating agency may downgrade Hungary.
Rating agencies were not immediately available for comment
but all three have already downgraded Hungary, in November, as
the global economic crisis deepened.
Fitch rates the country's long-term foreign currency debt at
BBB with a stable outlook while Moody's rates it at A3 with a
negative outlook and S&P at BBB with a negative outlook.
The Czech finance minister was quoted as saying on Friday
that growth would slip below 2 percent this year. []
EURO HOPES
Romania's leu <EURRON=> outperformed markets with a 0.5
percent rise due to investor fear of central bank intervention.
In Poland, whose plan to join the euro in 2012 has been
questioned by analysts, the zloty dropped to 4.403 to the euro
by 1131 GMT, down 0.9 percent from Thursday's closing levels.
"Everything seems to support the fall in zloty. At the
moment there is no positive news for the zloty whatsoever," said
Bogumil Modzelewski, a forex dealer at BGK bank.
"Emotions and global sentiment prevail while zloty
fundamentals are changing, as various GDP growth forecasts are
cut."
Markets across central Europe have come under renewed
pressure from the start of 2009, with stocks down more than 2
percent on Friday, tracking western peers as companies'
performance in the widening global economic crisis took a hit.
The zloty has been hardest hit in the region in the past two
weeks, falling 9.2 percent, while the forint is off 3.9 percent
in that time and the crown 5.5 percent.
Poland on Thursday reaffirmed its 2012 target for adopting
the euro, but economists said slowing growth could undermine the
plan by putting a heavy strain on the budget. Analysts expect
euro entry in 2013 at the earliest. []
Polish bonds were quiet on Friday after a drop in the
previous session following the pricing of a five-year bond issue
worth 1 billion euros at a yield of 300 basis points over
mid-swaps.
The spread was a steep rise on the Poles' last euro issue,
reflecting the impact of the credit crunch and crowding of
European government debt markets by developed countries
borrowing to stimulate their economies. []
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 28.055 27.757 -1.06% -4.64%
Polish zloty <EURPLN=> 4.403 4.365 -0.86% -6.54%
Hungarian forint <EURHUF=> 288.5 284.18 -1.5% -8.65%
Croatian kuna <EURHRK=> 7.47 7.441 -0.39% -1.41%
Romanian leu <EURRON=> 4.304 4.329 +0.58% -6.73%
Serbian dinar <EURRSD=> 95.327 94.578 -0.79% -6.13%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +13 basis points to 131bps over bmk*
4-yr T-bond CZ4YT=RR +10 basis points to +108bps over bmk*
8-yr T-bond CZ8YT=RR +8 basis points to +105bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +3 basis points to +763bps over bmk*
5-yr T-bond HU5YT=RR -18 basis points to +704bps over bmk*
10-yr T-bond HU10YT=RR -18 basis points to +517bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1233 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Andy Bruce)
