* FX give up daily gains but rise on the month
* Czech output drops more than expected in March, budget hit
* Polish cbanker says rates should stay on hold until June
By Krisztina Than and Jason Hovet
BUDAPEST/PRAGUE, April 30 (Reuters) - Emerging European
currencies edged down on Thursday, handing back early gains on
the back of more signals of economic pain for the region and a
rebound for the dollar.
The Czech Republic outlined a 2010 budget framework that
underlined how the global slowdown is hurting efforts by the
EU's eastern members to bring their fiscal deficits under the 3
percent of GDP ceiling needed to adopt the euro. []
Data also showed Czech industrial output dived 17.5 percent
on the year in March, while Romania's central bank said
elections this year could push the country's budget gap past 5.1
percent of GDP, topping a target agreed with the International
Monetary Fund in 20 billion euros aid deal. []
Adding to pressure on currencies, the dollar gained against
the euro after weekly claims for jobless benefits decreased,
hurting developing markets across the board.
"The dollar rebounded against the euro and that made all
emerging markets (currencies) to retreat," one Budapest-based
currency dealer said. "The market is quite quiet and will remain
that way unless we see trouble in the U.S."
By 1435 GMT, the Czech crown <EURCZK=> was flat at 26.73 to
the euro, and the Hungarian forint <EURHUF=> ticked up 0.1
percent to 288.65.
Poland's zloty <EURPLN=> dipped 0.1 percent from Wednesday's
domestic close to 4.418 per euro and Romania's leu <EURRON=>
fell 0.6 percent, also hit by profit taking from foreign
players, dealers said.
Markets close on Friday for May 1st holidays.
MORE PRESSURE
Currencies have swung widely in April, drifting back to
weaker levels from mid-month peaks.
The zloty gained 11 percent at the start of April to hit
4.225 per euro on April 15 on news Poland would get an IMF
credit line. It fell back last week after data showed a wider
than expected budget gap last year, but is still up 4.4 percent
for the month. Hungary's forint is up 6.9 percent and the crown
2.1 percent.
Sinking orders from the west for central Europe's
export-reliant businesses and creeping unemployment have started
putting government coffers under pressure, and strategists
expect grim economic outlooks to keep currencies on a weaker
footing.
The preliminary Czech industrial data showed a slower
decline than in previous months, but still missed analysts'
hopes despite a car scrapping subsidy that aided its key
automotive sector.
A Reuters poll on Thursday showed analysts forecast the
Czech central bank will cut interest rates by a quarter point
next week due to the worsening outlook.
Poland's central bank kept its key rate on hold at 3.75
percent on Wednesday, but many analysts said the bank was still
likely to ease borrowing costs further. []
A Polish rate setter said on Thursday rates should remain on
hold until June when the Monetary Council will receive a new
inflation projection. []
Polish bonds were a touch higher on Thursday, while Czech
papers also edged up. Hungarian bonds weakened along with the
forint. Hungary's debt agency is set to auction bonds again next
week after restarting regular sales this month.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.73 26.732 +0.01% +0.09%
Polish zloty <EURPLN=> 4.418 4.414 -0.09% -6.86%
Hungarian forint <EURHUF=> 288.65 289.00 +0.12% -8.7%
Croatian kuna <EURHRK=> 7.414 7.419 +0.07% -0.66%
Romanian leu <EURRON=> 4.197 4.171 -0.62% -4.35%
Serbian dinar <EURRSD=> 94.543 94.95 +0.43% -5.36%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 180bps over bmk*
4-yr T-bond CZ4YT=RR -4 basis points to +204bps over bmk*
8-yr T-bond CZ8YT=RR -8 basis points to +296bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -5 basis points to +413bps over bmk*
5-yr T-bond PL5YT=RR -7 basis points to +341bps over bmk*
10-yr T-bond PL10YT=RR -5 basis points to +300bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +876bps over bmk*
5-yr T-bond HU5YT=RR +5 basis points to +813bps over bmk*
10-yr T-bond HU10YT=RR +9 basis points to +726bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1639 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Krisztina Than and Jason Hovet; Editing by
Patrick Graham)
