PRAGUE, Nov 27 (Reuters) - The Hungarian forint and Polish
zloty led central European currencies lower on Friday as
investors retreated from risk in emerging markets on debt fears
in Dubai.
Worries that a Dubai debt default could spread financial
turmoil sent investors to safer ground, knocking emerging
European assets and highlighting debt problems that countries
like Ukraine or Hungary still face.
Dubai, part of the oil-exporting United Arab Emirates, said
on Wednesday it would ask creditors of state-owned groups to
agree to a standstill on billions of dollars of debt as a first
step toward restructuring. [] []
"There is a strong flight to quality which means the U.S.
dollar appreciates and hits all currencies in the region," said
Simon Quijano-Evans, emerging economist with Cheuvreux.
"But it also highlights the weaker fundamental stories in
the region, which include Hungary, Ukraine and Latvia...
particularly those that are exposed to high debt levels."
On Friday, the forint <EURHUF=> lost 0.6 percent to bid at
273.4 to the euro by 0833 GMT, an almost 3-week low.
The zloty <EURPLN=> kept pace with a 0.6 percent drop to
4.176 to the euro, while the crown, after testing a more than
3-week low, bid around 26.4 to the euro. In Romania, the leu
<EURRON=> was down 0.2 percent at 4.292 to the euro.
Dealers said moves had been hit also by low liquidity as
U.S. markets closed for holiday on Thursday and Friday.
Concerns have grown that Hungary, recipient of a $25 billion
International Monetary Fund-led aid package last year, may
overshoot its budget targets next year, which has contributed to
a widening spread between 3- and 10-year bonds in recent weeks.
Mihaly Varga, former finance minister and a top economic
advisor in Fidesz party that is expected to win elections next
year, told Reuters this week that Hungary's budget deficit as a
percent of gross domestic product could be almost double the
target set with the IMF. []
Central Europe has seen more volatility in the past months,
hit often by jitters from countries outside the immediate
region. Concerns over Ukraine's debt situation first weakened
central European currencies and banks last week. []
Strategists have forecast firmer currencies over the next
year []. Analysts also mostly agree the region is
past the worst of the economic crisis, although warn a recovery
will be sluggish with widening budget deficits and rising
unemployment weighing.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.412 26.301 -0.42% +1.29%
Polish zloty <EURPLN=> 4.176 4.149 -0.65% -1.46%
Hungarian forint <EURHUF=> 273.37 271.83 -0.56% -3.59%
Croatian kuna <EURHRK=> 7.311 7.304 -0.1% +0.74%
Romanian leu <EURRON=> 4.292 4.285 -0.16% -6.47%
Serbian dinar <EURRSD=> 94.6 94.64 +0.04% -5.41%
All data taken from Reuters at 0934 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaux; writing by Jason Hovet; editing
by Philippa Fletcher)
((prague.newsroom@thomsonreuters.com; Reuters Messaging:
jason.hovet.reuters.com@reuters.net; +420-224 190 476))
