* Currencies fall as poor U.S. data worsens sentiment
* Poland won't enter ERM2, says dep. finminister
* Hungary seeks higher 2009 deficit target -report
(Updates throughout)
By Gergely Szakacs and Dagmara Leszkowicz
BUDAPEST/WARSAW, May 13 (Reuters) - Central Europe's
currencies weakened on Wednesday after poor U.S. sales data hurt
regional sentiment, with the zloty hit hard after a minister
said Poland would not enter the euro adoption mechanism in the
first half of 2009 as planned.
At 1527 GMT, the Polish zloty <EURPLN=> had fallen 1.2
percent against the euro to 4.444, while Hungary's forint
<EURHUF=> led the region downwards with a 1.3 percent dip
against the euro at 282.95.
In the same time stocks dived -- Prague's PX <> led
losses with more than 6 pct fall. Other stocks fell 2-4.5
percent.
The U.S. data showed on Wednesday sales at the country's
retailers fell for a second straight month last month, dampening
sentiment toward emerging markets which depend on a pickup in
western consumption to help kickstart sputtering economies.
Analysts in the region said the data prompted investors to
put their capital into less risky assets.
"Generally speaking, it is a weaker day as stocks are
falling and the dollar is strengthening," said Michal Karewicz,
analyst at Citibank Handlowy. "And the global sentiment is
crucial (for the currencies in the region).
Another analyst said the Polish unit was additionally hit by
the recent comment of the country's deputy finance minister,
saying that Poland will not enter the pre-euro Exchange Rate
Mechanism-2 (ERM-2) in the first half of the year, as it has
been said previously. []
A Reuters poll of 25 emerging market strategists in April
forecast that Poland will enter the ERM-2 2010. []
In Hungary the business daily Vilaggazdasag published a
report saying that the government may broker a deal with the
International Monetary Fund for a higher budget deficit this
year to facilitate a faster recovery.
Hungary's 2009 budget deficit target could be raised to 3.9
percent of gross domestic product from 2.9 percent as a result
of talks between the government, the EU and the IMF, the report
said. []
Dealers said the report was market neutral.
"They have been pushing for this for a while now," a
currency dealer in Budapest said. "So I don't think it would
surprise anybody very much. In contrast to other countries, this
is still a very low (deficit target)."
Falling demand for Central Europe's cars, televisions and
other goods has blasted the region's economies, and markets were
eying first quarter GDP data in Hungary, the Czech Republic and
Romania on Friday.
Romania's leu <EURRON=> and the Czech crown <EURCZK=> also
weakened on Wednesday, falling 0.7 percent and 0.5 percent
respectively although the fall was not significant comparing to
the forint.
The data will shed light on how well the region's economies
are coping with the global downturn and how their financing
abilities have shifted.
Poland, the biggest ex-communist European Union member, is
fighting a sharp slowdown and Warsaw said it would downgrade its
economic forecasts in this year's budget in July.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.893 26.744 -0.55% -0.52%
Polish zloty <EURPLN=> 4.446 4.392 -1.21% -7.44%
Hungarian forint <EURHUF=> 284.01 279.3 -1.66% -7.2%
Croatian kuna <EURHRK=> 7.352 7.35 -0.03% +0.18%
Romanian leu <EURRON=> 4.173 4.145 -0.67% -3.8%
Serbian dinar <EURRSD=> 94.863 94.745 -0.12% -5.67%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 165bps over bmk*
4-yr T-bond CZ4YT=RR +11 basis points to +210bps over bmk*
8-yr T-bond CZ8YT=RR +5 basis points to +280bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +442bps over bmk*
5-yr T-bond PL5YT=RR +7 basis points to +349bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +302bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -16 basis points to +864bps over bmk*
5-yr T-bond HU5YT=RR -51 basis points to +801bps over bmk*
10-yr T-bond HU10YT=RR -42 basis points to +681bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1627 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Balazs Koranyi,
Gergely Szakacs and Dagmara Leszkowicz; Editing by Andy Bruce)
