(Adds new paras on government bonds, new prices, cuts
background.)
By Sandor Peto-Jason Hovet
BUDAPEST/PRAGUE, Feb 9 (Reuters) - Currencies in Central
Europe jumped on Monday, erasing earlier losses, with Poland's
zloty taking the lead, but the global appetite for risk may have
rebounded only for the short term, dealers said.
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 2.94 percent to 4.418 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."
The crown <EURCZK=> firmed 1.8 percent over Friday's
domestic close to bid at 27.545 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."
The Hungarian forint <EURHUF=> firmed 0.63 percent to 286.85
per euro, and the Romanian leu <EURRON=> gained 0.24 percent to
4.228.
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 a week ago and dealers said the tenders can have
a positive impact on the forint in the long 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.
BONDS FIRM
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 currency falls in the past weeks trimmed expectations
for further interest rate cuts, but Monday's firming which
helped government bonds rebound may revive hopes for rate cuts.
Traders said foreign investors again bought Polish and
Hungarian bonds, which may be the impact of central bank
interest rate cuts and economic stimuli programmes announced in
developed countries in the past weeks.
"The market may again start betting on interest rate cuts
(in Poland) because earlier when the zloty was weakening we saw
some in the market raising doubts about more easing," Maciej
Slomka, head of fixed-income trading at Pekao in Warsaw.
Hungarian benchmark bond yields fell partly due to the
replacement of earlier benchmarks with longer bonds.
Last week, analysts said in a Reuters poll it would likely
get worse for the region's currencies before it gets better.
[]
Economic figures continue to point to a grim economic
outlook in the export-reliant region hit by the global crisis.
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.
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=> 27.545 28.042 +1.8% -2.88%
Polish zloty <EURPLN=> 4.418 4.548 +2.94% -6.86%
Hungarian forint <EURHUF=> 286.85 288.65 +0.63% -8.12%
Croatian kuna <EURHRK=> 7.423 7.406 -0.23% -0.78%
Romanian leu <EURRON=> 4.228 4.238 +0.24% -5.05%
Serbian dinar <EURRSD=> 92.15 92.14 -0.01% -2.9%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -42 basis points to 145bps over bmk*
4-yr T-bond CZ4YT=RR +2 basis points to +116bps over bmk*
8-yr T-bond CZ8YT=RR -3 basis points to +221bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -10 basis points to +356bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +281bps over bmk*
10-yr T-bond PL10YT=RR -8 basis points to +227bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -32 basis points to +926bps over bmk*
5-yr T-bond HU5YT=RR -65 basis points to +837bps over bmk*
10-yr T-bond HU10YT=RR -54 basis points to +662bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1654 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Ruth Pitchford and Toby Chopra)
