* FX ease, forint leads losses on budget woes
* Hungary bond yields rise about 10 basis points
* Romania sells 3-times more than planned at Tbill auction
(Updates throughout)
By Sandor Peto and Marius Zaharia
BUDAPEST/BUCHAREST, Nov 26 (Reuters) - Central European
currencies fell on Thursday as investors shied away from risk
globally, with the forint leading losses due to rising concern
that Hungary may overshoot its budget deficit target next year.
Budget deficits have widened in the region amid the global
crisis apart from in Hungary which has cut spending, but a
central bank report [] fuelled concern over a risk
of a jump in the deficit, KBC said in its daily regional note.
Mihaly Varga, former finance minister and a top economic
advisor in opposition party Fidesz, told Reuters on Wednesday
that Hungary's budget deficit could come in at 7.0-7.5 percent
of GDP next year mainly due to one-off spending items not
included in the present draft budget. []
Hungary's forint <EURHUF=> shed 1.4 percent to the euro by
1457 GMT and bond yields rose by about 10 basis points, with the
spread between 3- and 10-year yields widening to 55 basis points
from 40 a week ago as investors shunned longer-dated papers.
"They repeat more and more that in 2010 the deficit will
overshoot and foreigners don't like this now," a dealer in
Budapest said.
Dealers said the forint was more sensitive than its peers to
changes in risk sentiment globally and that the move was also
accelerated by the breaking of a 270.20/50 key technical level.
The Polish zloty <EURPLN=> was down 0.7 percent and the
Czech crown <EURCZK=> eased 0.9 percent. Swap rates and FRAs
inched lower, unhurt by the weaker crown.
"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.
Investor mood 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. increased volatility in the region's markets.
AUCTIONS
Romania sold 1.4 billion euros in 1-year T-bills, almost
three times more than planned, in a move that analysts said was
favoured by a cut in hard currency reserve requirements earlier
this month, which is estimated to have freed a similar amount
with the one the government drained on Thursday [].
Hungary also held a 12-month T-bill auction [].
The 6 percent average yield at the auction confirms that the
market continues to expect monetary easing after central bank
rate cuts totalling 300 basis points to 6.5 percent in the past
five months, traders said.
Poland sold 3.36 billion zlotys worth of bonds maturing in
2012 and 2014 in exchange for papers maturing next year
[], but the tender failed to move the market.
Czech Republic held its final T-bill auction this year by
selling only about 60 percent of the offer, but with the yield
down more than 30 basis points since Oct 1. []
The Romanian leu <EURRON=> shed 0.5 percent, easing off
seven-week highs hit in the previous session.
"The leu still has potential to firm to 4.2... because of
elections nearing an end and high interest rates," a dealer
said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.203 25.969 -0.89% +2.1%
Polish zloty <EURPLN=> 4.14 4.11 -0.72% -0.6%
Hungarian forint <EURHUF=> 271.61 267.94 -1.35% -2.97%
Croatian kuna <EURHRK=> 7.32 7.308 -0.16% +0.61%
Romanian leu <EURRON=> 4.283 4.26 -0.54% -6.27%
Serbian dinar <EURRSD=> 94.72 94.64 -0.08% -5.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +7 basis points to 103bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +116bps over bmk*
10-yr T-bond CZ10YT=RR +3 basis points to +99bps 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 +22 basis points to +534bps over bmk*
5-yr T-bond HU5YT=RR +20 basis points to +487bps over bmk*
10-yr T-bond HU10YT=RR +12 basis points to +427bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1657 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Krisztina Than/Sandor Peto/Marius Zaharia;
editing by Philippa Fletcher)
((krisztina.than@reuters.com; tel +36 309 865 969; rme
krisztina.than@reuters.com.net))
