* CEE fx ease as Asian stocks signal risk aversion
* Forint leads losses on budget worries
(Adds new comments, prices.)
BUDAPEST, Nov 26 (Reuters) - Central European currencies
eased on Thursday morning tracking Asian stock losses, with the
forint leading declines due to increasing concern that Hungary
may significantly overshoot its budget deficit target next year.
Asian stocks fell and global investor sentiment was also
dented by news out of Dubai where the government said it would
seek debt delay for its two flagship firms. []
Thin liquidity due to the market holiday in the U.S. could
increase volatility in the region's markets, dealers said.
Hungary's forint led losses, shedding 0.8 percent against
the euro by 1046 GMT. Hungarian government bond yields rose by
about 10 basis points, and the spread between three- and 10-year
yields widened to 55 basis points from 40 a week ago as
investors shunned longer-dated papers.
Budget deficits have widened in the region amid the global
crisis apart from Hungary which has cut spending, but a central
bank report [] fuelled concern over risk of a jump
in the deficit, KBC said in its daily regional note.
"I think we weakened a bit due to the drop of Asian stocks
and also comments from (Hungarian opposition party) Fidesz about
a 7 percent budget deficit next year contributed to this
weakening," a dealer in Budapest said.
"They repeat more and more that in 2010 the deficit will
overshoot and foreigners don't like this now."
Mihaly Varga, former finance minister and a top economic
advisor in Fidesz, told Reuters on Wednesday that Hungary's
budget deficit could come in at 7.0-7.5 percent of gross
domestic product (GDP) next year mainly due to one-off spending
items not included in the present draft budget.
He also said Fidesz, widely expected to win elections in
early 2010, will aim to set a euro adoption target date by the
end of next year because markets need an anchor. []
"The level of 270.20/50 for the forint is an important
resistance as if it weakens past this level then technically the
forint can ease further," another currency dealer said.
The Polish zloty <EURPLN=> was down 0.4 percent and the
Czech crown<EURCZK=> eased 0.6 percent.
"At the moment it's very important that we broke the 26.00
per euro level and we stay there, which shows that... a path is
open to more weakening," said CSOB dealer David Sykora.
He said he estimated the unit could be around 26.25 at the
end of the week and at 26.50 to 27.00 at the end of the year.
The crown has separated from the rest of the region in its
latest fall, while it was alone in strengthening in the past
month, he said.
The region's currencies have traded more actively on high
interest rate differentials, Sykora added.
The Romanian leu <EURRON=> shed 0.3 percent, easing off more
than seven-week highs hit in the previous session, as some
investors were booking profits, dealers said.
"It is just a break before it likely firms again," a dealer
said. "The leu still has potential to firm to 4.2... because of
elections nearing an end, high interest rates and (positive)
regional mood."
Romania's finance ministry tenders 500 million euros in
1-year treasury bills on the domestic market later today.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.137 25.969 -0.64% +2.36%
Polish zloty <EURPLN=> 4.126 4.11 -0.39% -0.27%
Hungarian forint <EURHUF=> 270 267.94 -0.76% -2.39%
Croatian kuna <EURHRK=> 7.305 7.308 +0.04% +0.82%
Romanian leu <EURRON=> 4.271 4.26 -0.26% -6.01%
Serbian dinar <EURRSD=> 94.71 94.64 -0.07% -5.52%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +22 basis points to 118bps over bmk*
7-yr T-bond CZ7YT=RR +8 basis points to +125bps over bmk*
10-yr T-bond CZ10YT=RR +4 basis points to +100bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +8 basis points to +363bps over bmk*
5-yr T-bond PL5YT=RR +7 basis points to +333bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +294bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +6 basis points to +526bps over bmk*
5-yr T-bond HU5YT=RR +7 basis points to +485bps over bmk*
10-yr T-bond HU10YT=RR +4 basis points to +425bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1146 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.137 25.969 -0.64% +2.36%
Polish zloty <EURPLN=> 4.126 4.11 -0.39% -0.27%
Hungarian forint <EURHUF=> 270 267.94 -0.76% -2.39%
Croatian kuna <EURHRK=> 7.305 7.308 +0.04% +0.82%
Romanian leu <EURRON=> 4.271 4.26 -0.26% -6.01%
Serbian dinar <EURRSD=> 94.71 94.64 -0.07% -5.52%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +22 basis points to 118bps over bmk*
7-yr T-bond CZ7YT=RR +8 basis points to +125bps over bmk*
10-yr T-bond CZ10YT=RR +4 basis points to +100bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +8 basis points to +363bps over bmk*
5-yr T-bond PL5YT=RR +7 basis points to +333bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +294bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +6 basis points to +526bps over bmk*
5-yr T-bond HU5YT=RR +7 basis points to +485bps over bmk*
10-yr T-bond HU10YT=RR +4 basis points to +425bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1146 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Krisztina Than/Sandor Peto; Editing by Andy
Bruce)
((krisztina.than@reuters.com; tel +36 309 865 969; rme
krisztina.than@reuters.com.net))
