(Recasts with late rebound, new comments, prices.)
By Sandor Peto and Dagmara Leszkowicz
BUDAPEST/WARSAW, Jan 30 (Reuters) - Currencies in Central
Europe pared losses on Friday after data showed the U.S. economy
contracted less than expected in the fourth quarter, but the
deepening global crisis can continue to batter the units.
For most of the day, poor economic figures from Japan and
the U.S. weighed on the currencies of the region's export-driven
emerging economies, and the forint took an additional hit as
investors tried to push it through option barrier levels.
The currencies rebounded after the U.S. said its economy
contracted by an annual rate of 3.8 percent in the fourth
quarter, less than analysts' forecast of 5.4 percent.
But the U.S. economy shrank at its fastest pace in almost 27
years, confirming a dismal outlook for the world economy which
also dents Central Europe's prospects and maintains risk
aversion among investors, market participants said.
"The U.S. GDP was slightly better than expected but that
does not mean that the world will turn for the better," one
Budapest-based currency dealer said.
The forint<EURHUF=> traded at 297.10 against the euro at
1500 GMT, weaker by 2.51 percent from Thursday, though firmer
from all-time lows hit earlier in the day at 299.30.
Dealers said an option barrier at 298.50 was knocked out and
next week investors who try to push the currency through other
option barriers at or near the key psychological level at 300
were likely to weaken the forint further.
Analysts have said levels weaker than 300 may hit many
households which took out foreign currency loans in the past
years.
Central banks in the region, including Hungary, have been
cutting interest rates in the past months as dismal economic
data pointed to a drastic slowdown in growth or in the case of
Hungary, an economic contraction of 2-3 percent.[]
A combination of recurring waves of risk aversion in global
markets, poor domestic economic figures and the prospects of
further monetary easing have weighed on the currencies of the
region's economies in the first month of the year.
The Polish zloty <EURPLN=> fell 1.37 percent against the
euro to 4.45 by 1500 GMT, the Czech crown <EURCZK=> lost 1.01
percent to trade at 27.848 and the Romanian leu <EURRON=> shed
1.3 percent to 4.298.
"The higher risk aversion does not benefit the region's
currencies, and prices of bonds are falling further," Raiffeisen
analysts said in a note. "In the case of Czech papers, we
recommend from now on a neutral position."
"In the coming days it is likely the crown and domestic
assets like bonds will stay under the influence of negative
sentiment."
The leu stays under pressure after contradictory statements
from President Traian Basescu and Prime Minister Emil Boc about
whether the country, which started talks with the European
Commission on a potential rescue loan, needs International
Monetary Fund (IMF) help. []
Boc confirmed on Thursday his government was struggling to
finance this year's deficit and a request for aid from the IMF
or the EU could not be ruled out.
"The unwillingness to go for an IMF program and the
suggestion that there are many solutions to the external funding
problem is particularly worrying; we expect the currency to
weaken sharply," BNP Paribas said in a note.
Hungary also launched a $4.5 billion budget reshuffle to
combat the economic crisis and data showed Polish growth slowed
at the end of 2008, with several analysts saying it could now
slip into recession in the first half of 2009.
In Poland analysts also said concerns over the 2009 budget
are unsupportive for the debt market. Poland said on Friday that
it planned to issue less debt and shorter maturities in
February, than in January.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.848 27.568 -1.01% -3.93%
Polish zloty <EURPLN=> 4.45 4.389 -1.37% -7.53%
Hungarian forint <EURHUF=> 297.1 289.65 -2.51% -11.29%
Croatian kuna <EURHRK=> 7.363 7.365 +0.03% +0.03%
Romanian leu <EURRON=> 4.298 4.242 -1.3% -6.6%
Serbian dinar <EURRSD=> 94.338 94.05 -0.31% -5.15%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +4 basis points to 112bps over bmk*
4-yr T-bond CZ4YT=RR +5 basis points to +110bps over bmk*
8-yr T-bond CZ8YT=RR 0 basis points to +123bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +329bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +268bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +249bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +8 basis points to +827bps over bmk*
5-yr T-bond HU5YT=RR +11 basis points to +778bps over bmk*
10-yr T-bond HU10YT=RR +11 basis points to +616bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1600 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 []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Sandor
Peto/Dagmara Leszkowicz, editing by Andy Bruce/Victoria Main)
