* Budget details key for HUF, but volatility may continue
* HUF/PLN position-closing may support forint
* Leu lacks momentum to break 200-day avg 4.26 per euro
By Marius Zaharia
BUCHAREST, Oct 29 (Reuters) - The forint held steady early
on Friday while investors awaited full details of Hungary's
budget plans for next year, as some of the related measures have
caused large asset swings in recent months.
The Fidesz government is expected to tell parliament before
a Sunday deadline how it plans to cut its budget deficit to
below 3 percent of gross domestic product. []
Its September pledge to cut the deficit helped the forint
firm up about 5 percent to the euro, but later announcements of
unorthodox measures such as special taxes for parts of the
corporate sector and the suspension of payments to private
pension funds have spooked investors again.
Markets will be trying to gauge how realistic the economic
assumptions in the budget are and whether the draft includes
measures to trim a bloated public sector.
As of 0744 GMT, the forint <EURHUF=> was down 0.1 percent on
the day, Romania's leu <EURRON=> and the Czech crown <EURCZK=>
were flat, while the Polish zloty <EURPLN=> was 0.2 percent
weaker.
"Volatility is unlikely to disappear," Citi said in a note
on Hungary.
"Although the government should be able to reduce the
deficit in 2011 we expect also unfavourable comments from rating
agencies because of Hungary's plan to suspend transfers to
pension funds."
Markets were also watching for U.S. third-quarter GDP data
later in the day.
The forint could be helped in the short term by the
continued unwinding of zloty/forint positions after the Polish
central bank kept interest rates unchanged earlier this week,
disappointing some market players.
Closing of such positions pushed the forint up by 1 percent
against the euro on Thursday. On Friday, the forint traded at
68.647 per zloty <PLNHUF=R>, below its 200-day moving average at
69.06.
"We continue to maintain a long positioning in forint/zloty
where the relative HUF-gains have seen the currency pair
overtake the resistance," Danske said in a note.
Romania's leu hovered above its 200-day moving average at
4.26 per euro, with little strength to break below that even
though investors were relieved to see the government survive a
no-confidence vote earlier this week.
Markets are watching for any comments from an IMF mission
which is in Bucharest until Nov. 1 to review a 20 billion euro
aid deal.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.625 24.623 -0.01% +6.88%
Polish zloty <EURPLN=> 3.982 3.973 -0.23% +3.06%
Hungarian forint <EURHUF=> 273.4 273.07 -0.12% -1.12%
Croatian kuna <EURHRK=> 7.338 7.336 -0.03% -0.39%
Romanian leu <EURRON=> 4.267 4.266 -0.02% -0.69%
Serbian dinar <EURRSD=> 107.03 107.47 +0.41% -10.42%
All data taken from Reuters at 0844 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Marius Zaharia; editing by Hugh Lawson)
