* Czech deficit to be less than target - finance minister
* Poland to cut pension fund transfers to plug budget - PM
* Hungary pays higher yield on bonds, CHF/HUF near record high
(Adds Poland pension reform, Czech deficit, updates markets)
By Marton Dunai and Dagmara Leszkowicz
BUDAPEST/WARSAW, Dec 30 (Reuters) - The Czech crown was the
top performing currency in emerging Europe on the last full
trading day of the year, punctuating a strong performance in
2010 that reflected confidence in the republic's fiscal and
economic position.
The crown <EURCZK=> added a third of a percent by 1529 GMT
on Thursday as the Finance Minister said the government was on
course to meet its 2010 deficit target and that it could even
come in slightly below the government's aim of 163 billion
crowns. []
The Polish zloty <EURPLN=> held steady near a one-month high
helped by state-owned BGK bank converting euros into the local
currency, but Polish bonds weakened a shade on the longer end
after the government unveiled a pension reform proposal.
Polish Prime Minister Donald Tusk unveiled plans to cut
employees' contributions to mandatory private pension funds to
2.3 percent of their monthly salaries from 7.3 percent at
present to help shore up budget finances. []
BGK bank is authorised to convert euros for zlotys on behalf
of the finance ministry, which needs to exchange European Union
funds. The bank's presence in the market also has a
psychological impact in supporting the zloty, dealers said.
"BGK is likely to rule in the market until the end of the
year," said one Warsaw-based dealer. "The local support level is
(EUR/PLN) 3.96."
Meanwhile, the Hungarian forint <EURHUF=> slipped 0.2
percent on the day against the euro as the country's assets
continued to feel the effects of two recent ratings downgrades.
The forint also suffered against the global safe haven Swiss
franc, whose strength pushed the CHF/HUF pair near the all-time
high of 226.36 in intraday trading. The strength of the franc,
the main funding unit for Hungary's foreign currency loans,
hurts the hundreds of thousands of Hungarian households who have
taken out franc-denominated debt.
The Romanian leu <EURRON=> was flat.
HUNGARIAN YIELDS RISE
The Czech crown is the top gainer in the region this year,
having added 4.4 percent, followed by the zloty, which is also
backed by strong economic fundamentals and which has gained 3.5
percent in 2010.
The forint <EURHUF=> and the leu <EURRON=> have slipped 3.2
percent and 1.1 percent, respectively, in 2010 amid political
tension and uncertainty over their fiscal outlooks.
Data from the National Bank of Hungary showed the country's
current account surplus stood at 477 million euros in the third
quarter, more than analysts' forecasts. []
Hungary was forced to pay yields up to a quarter of a
percent above recent levels as it sold 45 billion forints worth
of bonds at the year's last auction, as planned. []
Poland said it would sell 12-18 billion zlotys worth of
treasury bills at 12 auctions in the first quarter.
[]
Both countries' bond markets were quiet at the end of the
year, although longer-maturity Polish bond yields rose about 3
basis points after the pension reform announcement.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.199 25.283 +0.33% +4.44%
Polish zloty <EURPLN=> 3.965 3.965 0% +3.51%
Hungarian forint <EURHUF=> 279.35 278.9 -0.16% -3.22%
Croatian kuna <EURHRK=> 7.384 7.385 +0.01% -1.01%
Romanian leu <EURRON=> 4.286 4.286 0% -1.13%
Serbian dinar <EURRSD=> 105.4 104.9 -0.47% -9.03%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -15 basis points to 65bps over bmk*
7-yr T-bond CZ7YT=RR +8 basis points to +93bps over bmk*
10-yr T-bond CZ9YT=RR +8 basis points to +80bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +1 basis points to +381bps over bmk*
5-yr T-bond PL5YT=RR +6 basis points to +360bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +301bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +6 basis points to +669bps over bmk*
5-yr T-bond HU5YT=RR +14 basis points to +604bps over bmk*
10-yr T-bond HU10YT=RR +12 basis points to +500bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1629 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, Writing by Marton Dunai and
Dagmara Leszkowicz, Editing by Hugh Lawson and Susan Fenton)
