(Adds new quotes, Polish CDS rise, Hungarian swap tender,
new prices.)
BUDAPEST/PRAGUE, Feb 9 (Reuters) - The Czech crown jumped on
Monday along with the Polish zloty, erasing earlier losses, as
investors returned to riskier assets, and analysts and dealers
said Central Europe's currencies could gain further in the short
term.
Stocks also reversed to trim losses, along with some western
peers, although investors showed caution pending the approval in
the United States of a massive stimulus plan. []
The zloty <EURPLN=> added 2.32 percent to 4.445 to the euro,
even though Polish sovereign five-year credit default swaps
(CDS) rose 15 bps to a record high of 343.8 following a weekend
denial by Poland's finance minister that the country was in
talks with the International Monetary Fund for possible support.
"We seem to have a sea change in sentiment for risk at the
moment... Some risk is being put back on now," one London-based
dealer said, adding that market liquidity remained low.
"It still looks corrective; I'm a bit suspicious that it
looks people think everything is alright with the world. But
people are not going to stand (in the zloty's) way for now," he
said.
The crown <EURCZK=> firmed 1.31 percent over Friday's
domestic close to bid at 27.68 per euro by 1401 GMT.
Dealers said there was more room to rise after the central
bank last week unveiled an FX forecast showing much stronger
local currency levels than today. []
"The euro/crown has more potential for a deeper correction,"
a Prague trader said, adding a support level will be hit at 27.4
per euro. "Investors are starting to look at riskier assets."
Currencies have been hit hard in 2009 by risk aversion, and
economic outlooks point to a sharp slowdown this year due to
slumping demand from a recession-hit euro zone.
Rate setters have loosened monetary policy in response,
while currencies' sharp reversal from all-time highs seen last
summer has left many exporters overhedged.
The Hungarian forint <EURHUF=> firmed 0.61 percent to 286.90
per euro, and the Romanian leu <EURRON=> gained 0.07 percent to
4.235.
Hungary's central bank allocated 820 million Swiss francs at
its one-week euro-Swiss franc swap tender on Monday, up from 303
million francs at its first weekly tender held one week ago and
dealers said the tenders can have a positive impact on the
forint in the longer term.[]
"If the bank will be able to hold them regularly, with
sizeable amounts, the tenders can help Hungarian banks and in an
indirect way it can also help their clients (borrowers),
reducing the pressure on foreign currency loan holders," one
local dealer said.
"At the moment there is no negative news, big funds have
closed earlier (selling positions) and now some firming is
likely until they can again start to open positions," another
dealer said.
In the Czech Republic, data showed inflation decelerated
further in January to 2.2 percent, below the bank's mid-point
target. []
Other data showed the Czech jobless rate jumped by almost a
percentage point in January, and Slovakia's industry showed its
worst contraction in a decade.
The Czech central bank cut interest rates to a historic low
on Thursday, but signalled rates may be near bottom, although
analysts said there was still room to cut.
Romania's central bank governor said on Friday monetary
policy will remain tight until fiscal and wage discipline is
enforced. []
The zloty has lost almost 29 percent since the end of July,
while the forint is down 19 percent in that time. The crown has
fallen 14 percent and the leu 17 percent.
Last week, analysts said in a Reuters poll it would likely
get worse for the region's currencies before it gets better.
[]
Investors were bracing for a slew of fresh data this week
from central Europe's fast slowing economies, including GDP data
in Hungary and the Czech Republic.
"The surprise potential is rather limited," said Ulrich
Leuchtmann, head of foreign exchange research at Commerzbank in
Frankfurt. "Everybody knows we are heading for a rather steep
economic slowdown."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.68 28.042 +1.31% -3.35%
Polish zloty <EURPLN=> 4.445 4.548 +2.32% -7.42%
Hungarian forint <EURHUF=> 286.9 288.65 +0.61% -8.14%
Croatian kuna <EURHRK=> 7.429 7.406 -0.31% -0.86%
Romanian leu <EURRON=> 4.235 4.238 +0.07% -5.21%
Serbian dinar <EURRSD=> 92.06 92.14 +0.09% -2.8%
All data taken from Reuters at 1501 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 Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford and Toby Chopra)
