WARSAW, Sept 10 (Reuters) - Central European currencies were
all in positive territory on Friday with Hungary's forint
leading gains, and dealers said the currency was likely to
continue firming on the back of the government's ambitious
deficit cutting plans.
Hungary's commitment to cut next year's budget deficit to
below the EU's 3 percent ceiling also lifted demand at
Thursday's bond auction and sent the country's bond yields some
18-28 basis points lower after the tender. []
"Hungary's plan to cut its budget deficit is very positive
news for the forint, but I think the market has still not fully
digested it due to conflicting communication by the government,"
said Ulrich Leuchtmann, analyst at Commerzbank in Frankfurt.
"That's why I think there's still scope for the forint to
appreciate further because of the fiscal plan," he added.
The budget announcement was a complete U-turn for Viktor
Orban's government, which had for months turned its back on
outside aid and eschewed budget austerity.
But months of communication gaffes and attempts to wiggle
out of commitments by Orban's cabinet mean markets will retain
some scepticism until they see concrete steps. [].
By 0821 GMT, Hungary's forint <EURHUF=> was 0.4 percent
stronger at 283.35 per euro, and dealers said the next key level
for the currency is around 282.50.
"If the Swissie and the dollar remain calm and there are no
botched comments from the Hungarian government, the forint can
slowly edge toward 280, probably toward the end of next week,"
one Budapest-based dealer said.
The Polish zloty <EURPLN=> was a touch stronger against the
common currency, while the Czech crown <ERUCZK=> and Romania's
leu <EURRON=> each gained 0.2 percent.
The forint has lost some 5.0 percent of its value since the
start of the year. By contrast, the Czech crown <EURCZK=> has
gained more than 7 percent in the same period and the Polish
zloty <EURPLN=> has added some 4.5 percent.
Data released on Friday showed inflation slowed to 3.7
percent on an annual basis in Hungary last month, while in
Romania it quickened to 7.6 percent, but the readings had
limited impact on currencies. [] []
Elsewhere, the Polish central bank will publish current
account data for July at 1200 GMT, with analysts expecting the
deficit on an annual basis to narrow slightly from the previous
month to stand at 0.794 billion euros.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.664 24.702 +0.15% +6.71%
Polish zloty <EURPLN=> 3.93 3.933 +0.08% +4.43%
Hungarian forint <EURHUF=> 283.35 284.6 +0.44% -4.59%
Croatian kuna <EURHRK=> 7.284 7.284 0% +0.35%
Romanian leu <EURRON=> 4.268 4.275 +0.16% -0.72%
Serbian dinar <EURRSD=> 104.867 104.87 0% -8.57%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to 93bps over bmk*
7-yr T-bond CZ7YT=RR 0 basis points to +81bps over bmk*
10-yr T-bond CZ9YT=RR +4 basis points to +88bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR 0 basis points to +402bps over bmk*
5-yr T-bond PL5YT=RR +1 basis points to +396bps over bmk*
10-yr T-bond PL10YT=RR -4 basis points to +324bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +12 basis points to +635bps over bmk*
5-yr T-bond HU5YT=RR +11 basis points to +597bps over bmk*
10-yr T-bond HU10YT=RR +11 basis points to +513bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1021 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus; Writing by Dagmara
Leszkowicz; Editing by Toby Chopra)
