(Adds details, fixed income, byline)
By Jason Hovet
PRAGUE, Jan 26 (Reuters) - The Polish zloty and Hungarian
forint rebounded on Monday from fresh lows hit last week, taking
a pause from recent weakening as investors repositioned in
central Europe's currencies.
Currencies have been hammered in recent weeks as a darker
picture of the region's growth prospects appears on the back of
lost demand from a shrinking euro zone, and central banks have
turned to deep monetary policy easing in response.
Poland's central bank is the next in line and is expected to
cut rates 50 basis points to 4.5 percent on Tuesday to prop up
emerging Europe's largest economy. []
"There was some bearish positions building up (last week)
and we are seeing some profit taking on that right now," said
Martin Blum, emerging strategist at UniCredit in Vienna.
He added that news flow has slowed in recent days, which has
limited recent weakening, but said the trend will continue until
growth stories stabilise.
The zloty <EURPLN=> firmed 0.9 percent by 0951 GMT to trade
below the key 4.40 level, which it passed for the first time
since September 2004 on Friday as investors booked profits.
Recent data has pointed to a sharper slowdown in central
Europe's once-fast growing economies, with Hungary already
heading for a recession, and policymakers have signalled growth
forecasts will be slashed.
Polish retail data on Monday showed a slight pickup but not
enough to alter economists' view.
"It is very clear Poland is in for a very sharp slowdown.
Despite this reading, the MPC (central bank) will decide to cut
rates by 50 basis points (this month)," said David Hauner,
emerging markets strategist at Bank of America in London.
Czech central bank governor Zdenek Tuma said on Monday his
country's economic growth could be close to zero in 2009 but he
still expected positive growth. []
Over the weekend, the Czech Finance Minister Miroslav
Kalousek said his office has drafted a revision to the 2009
state budget that anticipates the deficit could hit double the
approved level due to a fall in economic growth. []
The crown <EURCZK=> added 0.8 percent to trade below the key
28 per euro level on Monday. In Hungary the forint <EURHUF=>
rose 0.8 percent, just off a record low above 290 hit on Friday.
The crown fell to its lowest since August 2007 on Friday,
and UBS said it still recommended a long euro/crown.
"Since the time we put out this trade we believe this
position has become crowded and we would not be surprised to see
some profit taking leading to shallow declines (in levels)," its
analysts said in a Monday note.
In Romania, the leu <EURRON=> firmed 0.8 percent to 4.25 per
euro. The unit bucked the regional weakening trend on Friday,
helped by what dealers said was the largest central bank
intervention so far this year. []
Croatia's kuna <EURHRK=> was 0.1 percent down after a
central bank intervention on Friday, while the Serbian dinar
<EURRSD=> edged up 0.1 percent, still near all-time lows.
In other trade, central European stock markets cautiously
rallied, while fixed income markets rebounded, with yields on
Hungarian government bonds slipping 10-15 basis points.
Hungary's state debt agency expects to resume regular bond
issuance in the second quarter, but may conduct one offering in
February, its deputy CEO said on Monday. []
The AKK stopped bond issuance in October when Hungary
averted financial crisis only by way of an IMF/EU-led $25.1
billion rescue loan.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.887 28.097 +0.75% -4.07%
Polish zloty <EURPLN=> 4.38 4.421 +0.94% -6.05%
Hungarian forint <EURHUF=> 286.5 288.89 +0.83% -8.01%
Croatian kuna <EURHRK=> 7.4 7.39 -0.14% -0.47%
Romanian leu <EURRON=> 4.252 4.285 +0.78% -5.59%
Serbian dinar <EURRSD=> 95.219 95.327 +0.11% -6.03%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -6 basis points to 121bps over bmk*
4-yr T-bond CZ4YT=RR +9 basis points to +102bps over bmk*
8-yr T-bond CZ8YT=RR -4 basis points to +98bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -25 basis points to +795bps over bmk*
5-yr T-bond HU5YT=RR -23 basis points to +742bps over bmk*
10-yr T-bond HU10YT=RR -19 basis points to +558bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1054 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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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by Toby Chopra)
