* Hungary c.bank says to use all policy tools, EU funds to
support forint
* Polish c.bank chief says zloty undervalued
* FX pare initial gains, stocks follow global peers down
* Czech exports fall, adding to regional economic worries
* Romania looks more likely to seek IMF help
(Updates throughout, adds dateline)
By Krisztina Than and Jason Hovet
BUDAPEST/PRAGUE, March 9 (Reuters) - Hungary's forint held
stronger against the euro on Monday, but slipped from highs with
the Polish zloty as markets were unconvinced over central bank
statements aimed at boosting the hard-hit currencies.
Emerging European currencies have dropped to new lows in the
past month on increasing worries over a darkening economic
outlook and some countries' exposure to foreign credit.
The Czech crown pulled back from morning highs after data
showed exports there dropped at the fastest annual pace on
record, while the forint and zloty quickly shed gains from
central bank statements pledging to support those currencies.
Hungary's central bank said on Sunday it was ready to use
its entire monetary policy tool kit to normalise markets, its
strongest move so far to prop up the forint which hit an
all-time low on Friday. []
The bank also said it would start channelling EU funds to
the market, mirroring a similar Polish move last month.
And in Basel, Polish central bank Governor Slawomir Skrzypek
said on Monday the country's currency was undervalued and the
bank was ready to intervene to prop it up. []
"The market is not really convinced on these statements,"
said Societe Generale emerging markets strategist Murat Toprak.
"The available tools of central banks are rather limited."
The forint <EURHUF=> bid 1.7 percent stronger from Friday's
closing levels at 309 versus the euro at 1401 GMT. It has lost
14.7 percent this year, exceeding its peers' 3-13 percent falls.
Poland's zloty <EURPLN=> was steady at 4.724 per euro and is
down 12.9 percent for the year. The crown <EURCZK=> gained 0.9
percent and after sharp gains last week is off just 2.7 percent
since Jan. 1.
"The crown is up and down right now related to the forint,"
a Prague dealer said. "Economic figures were mixed this morning,
but it shows a worsening economy. The story is still weakening."
Romania's leu <EURRON=> was down 0.1 percent since Friday,
and dealers said worries over central bank intervention have
tamed losses helping the currency outperform peers this year.
Prague and Warsaw's stock indices shed 1-2 percent after
world stocks fell to 14-year lows, but reversed losses after a
strong U.S. open. []
HELP ON THE WAY
Markets were also looking to a speech later from Romanian
President Traian Basescu seeking cross-party support for fiscal
austerity, in what was seen as a possible bid to pave the way
for possible International Monetary Fund aid -- which would make
it the third European Union member seeking help. []
EU leaders earlier this month brushed aside a Hungarian
proposal for a region-wide aid package which was also opposed by
stronger economies like Poland and Czech Republic, which have
tried to distance themselves from weaker neighbours.
A draft document before next month's G20 summit on Monday
showed the EU was set to back an IMF call for $500 billion to
fight the financial crisis. []
Central Europe's once-booming economies have seen falling
demand for their goods in the recession-hit euro zone, leaving
countries like Hungary and Romania vulnerable after they fuelled
past growth mainly with foreign credit and investment.
Hundreds of thousands of Hungarian and Romanian borrowers
have seen their borrowing costs soar this year after seeking out
loans in euros or Swiss francs in past years due to higher
borrowing costs at home.
The zloty's loss of almost a third of its value against the
euro since summer highs has also pressured Polish companies that
had bet on a stronger unit using currency options.
Analysts say falling interest rates have accelerated
currency falls, and they expect a pause in easing cycles or in
some cases, like Hungary, hikes.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.508 27.747 +0.87% -2.74%
Polish zloty <EURPLN=> 4.724 4.725 +0.02% -12.89%
Hungarian forint <EURHUF=> 309.00 314.32 +1.72% -14.71%
Croatian kuna <EURHRK=> 7.441 7.425 -0.22% -1.02%
Romanian leu <EURRON=> 4.29 4.285 -0.12% -6.42%
Serbian dinar <EURRSD=> 94.39 94.867 +0.51% -5.2%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -50 basis points to 214bps over bmk*
4-yr T-bond CZ4YT=RR -7 basis points to +249bps over bmk*
8-yr T-bond CZ8YT=RR -5 basis points to +315bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1503 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 []
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Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
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(Reporting by Reuters bureaus, writing by Jason Hovet/Krisztina
Than; editing by Stephen Nisbet)
