* Forex retreats following stocks, Fed dents risk appetite
* S&P outlook revision gives Czech crown some support
* Polish bonds resilient as ministry reduces debt supply
(Updates throughout)
By Marton Dunai and Marcin Goettig
BUDAPEST/WARSAW, Aug 11 (Reuters) - Central European
currencies fell on Wednesday, tracking declining equity indices
around the globe as concerns over the U.S. growth outlook dented
the appetite for riskier assets.
Investors were selling higher-yielding currencies and stocks
on Wednesday after the U.S. Federal Reserve acknowledged that
economic growth in the world's largest economy had slowed down.
The most liquid currency of the region, the Polish zloty
<EURPLN=>, was down 0.7 percent to 4.006 per euro by 1353 GMT.
The Hungarian forint <EURHUF=> lost 1.1 percent to 282.62 versus
the euro.
The Czech crown <EURCZK=>, seen as the region's safe haven,
declined 0.4 percent, while Romania's leu <EURRON=> edged lower
to 4.238 against the common currency.
Dealers said the Czech unit drew some support after rating
agency Standard & Poor's revised its outlook for the Czech
Republic to positive, and after the new government won a
confidence vote on Tuesday. [] []
"Risk appetite is weaker due to worries regarding the pace
of recovery in the U.S.," said a Warsaw-based dealer.
Polish bonds remained resilient on Wednesday despite a high
level of risk aversion, as a relatively small debt supply in
August buttressed the market.
"The market seems rather strong, as we have the zloty above
4 per euro and bonds are stable. The lower supply for August
prevents yields from rising," another Warsaw-based dealer said.
Hungary will offer 50 billion forints of debt for sale at a
regular auction on Thursday. <HUISSUE>
It raised the amount sold at the previous two bond tenders
due to good demand.
Budapest will also seek to raise 3.5 billion euros from the
international markets next year, the deputy chief of the debt
agency said on Wednesday. []
DATA
In Hungary, data showed inflation slowed to 4 percent last
month on an annual basis, while in neighbouring Romania CPI
surged to 7.1 percent, although that was below forecasts for 7.3
percent. [] [].
The readings had no significant impact on currencies,
dealers said.
Minutes of a Hungarian central bank meeting in July showed
all seven of the bank's rate-setters voted to keep the key base
rate unchanged at 5.25 percent. []
"Having cut interest rates so much in Hungary over the past
year, they've got very little space to do anything more," said
Nigel Rendell, senior emerging market FX strategist at Royal
Bank of Canada.
"In the near term the forint will probably tread water
around the 280 per euro level."
The Polish zloty was unfazed by data showing a
larger-than-expected deficit on the current account in June.
"We would be looking for the zloty to strengthen over the
next 6 months to over 3.90 against the euro," Rendell added,
saying that the prospects of an expanding economy leading to
higher interest rates support the Polish currency.
Poland was the only economy to post growth in the European
Union in 2009, and analysts expect it to grow 3.1 percent in
2010. The Polish central bank is expected to raise its key rate
by 25 basis points to 3.75 percent by the end of the year.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.801 24.708 -0.37% +6.12%
Polish zloty <EURPLN=> 4.006 3.978 -0.7% +2.45%
Hungarian forint <EURHUF=> 282.62 279.52 -1.1% -4.34%
Croatian kuna <EURHRK=> 7.221 7.217 -0.06% +1.22%
Romanian leu <EURRON=> 4.238 4.236 -0.05% -0.01%
Serbian dinar <EURRSD=> 104.753 104.89 +0.13% -8.47%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +6 basis points to 115bps over bmk*
7-yr T-bond CZ7YT=RR 0 basis points to +117bps over bmk*
10-yr T-bond CZ9YT=RR +9 basis points to +121bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +416bps over bmk*
5-yr T-bond PL5YT=RR +12 basis points to +397bps over bmk*
10-yr T-bond PL10YT=RR +12 basis points to +336bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1553 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Krisztina Than; Editing by Susan Fenton/Ruth
Pitchford)
