WARSAW, Oct 6 (Reuters) - Poland's zloty rose in early trade
on Wednesday, catching up with recent gains by other regional
units, and dealers said rises in global stocks and a soaring
euro were likely to lift central Europe's assets further.
Some dealers also attributed the zloty gains to news that
Czech miner NWR <NWRSsp.PR> had launched an all-cash bid worth
3.43 billion zlotys ($1.21 billion) for Polish rival Bodganka.
[]
The zloty <EURPLN=> traded around a key support level of
3.93 to the euro, up 0.4 percent by 0706 GMT. Hungary's forint
<EURHUF=> was almost flat to the euro, while the Czech crown
<EURCZK=> was up 0.1 percent.
The euro, the region's main reference currency, has risen
almost 8 percent against the dollar in the past month on
speculation that the U.S. Federal Reserve may resume
quantitative easing, possibly as soon as its November policy
meeting, and this has contributed to the gains of central
European currencies.
"Sentiment in the region is positive, the forint and the
zloty are strong and it looks like Hungary's currency opened new
support levels after it breached 270.0 to the euro," said Marcin
Bilbin, a dealer at Pekao Bank in Warsaw.
The forint has gained more than 5 percent since the start of
September after the centre-right ruling Fidesz party pledged to
cut the budget deficit below 3 percent of GDP.
Markets are awaiting details of the 2011 budget plan to be
released this month, and many analysts remain sceptical that
Fidesz will be able to make enough cuts to bring the deficit
down to the EU's 3 percent/GDP ceiling.
There is also scepticism about the Polish government's
ability to rein in its deficit and public debt in the near term,
though investors and ratings agencies are relatively relaxed for
now. The government is reluctant to act before a 2011 election.
Prime Minister Donald Tusk said on Tuesday the general
government deficit could widen to between 7 and 8 percent of GDP
this year, well above the 6.9 percent target. []
"The issue of national debt is a sword of Damocles for the
zloty," analysts at Commerzbank wrote in a note. "However, it
would only become an acute problem once the central bank started
ignoring it."
The Polish central bank's Monetary Policy Council (MPC) is
expected to raise rates by a modest 25 basis points from a
record low of 3.5 percent as early as this month.
Elsewhere, Romania's leu <EURRON=> edged 0.1 percent lower
ahead of Wednesday's expected ruling by the Constitutional Court
on a government pension reform bill that is a key plank of an
IMF aid deal.
The leu has underperformed its central European peers since
September because of domestic political strife and debt
concerns. The opposition is set to file a no-confidence vote
ahead of an IMF mission to review the 20-billion-euro aid deal
at the end of October.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.473 24.489 +0.07% +7.54%
Polish zloty <EURPLN=> 3.931 3.947 +0.41% +4.4%
Hungarian forint <EURHUF=> 269.53 269.5 -0.01% +0.3%
Croatian kuna <EURHRK=> 7.301 7.303 +0.03% +0.11%
Romanian leu <EURRON=> 4.284 4.281 -0.07% -1.09%
Serbian dinar <EURRSD=> 105.89 105.94 +0.05% -9.45%
All data taken from Reuters at 0906 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara
Leszkowicz, editing by Tim Pearce)
