(Adds details, fixed income, byline)
By Jason Hovet
PRAGUE, Jan 13 (Reuters) - The Romanian leu and Hungarian
forint flirted with new lows on Tuesday as investors worried
about how hard the global economic slowdown might hit the
region.
Emerging European currencies tumbled in the last half of
2008 and got little respite from weak risk appetite and a slew
of tougher economic data going into the new year.
A gas row between Russia and Ukraine that has cut off
supplies to Europe in the past week and risked drops in
industrial production has also added to concerns, but looked
near a conclusion on Tuesday.
The leu <EURRON=> has sunk to an all-time low in the past
week and traded just shy of it on Tuesday at 4.327 per euro.
Poland's zloty <EURPLN=> led losses, slipping 1.6 percent from
Monday's domestic close to 4.123 to the euro.
In Hungary, the forint <EURHUF=> was off 0.9 percent at
283.85 to the euro by 0945 GMT, closing in on lows beyond 286
hit in October when the global financial crisis hit central
Europe the hardest. Bond yields rose, tracking the currency.
"The forint is on a weak footing. I'd say this is much more
due to a very poor external environment and heavy risk aversion
than domestic factors," a dealer in Budapest said.
"But there is also the IMF. There's great uncertainty over
what they're going to do with Hungary," the dealer added.
Hungary signed up for a $25 billion IMF/EU package in
October to calm investor nerves over its external financing, and
the IMF's managing director is in Budapest on Tuesday to meet
government and central bank officials before holding a press
conference at 1530 GMT.
IMF RESCUE
The forint has dropped heavily in the past few days, but
Finance Minister Janos Veres said on Tuesday the fall was due to
unfounded market speculation the IMF and Hungary differed on
certain issues. []
Veres said Hungary was committed to meeting its 2009 budget
deficit target of 2.6 percent of gross domestic product (GDP)
and it was carrying out the programme agreed with the
International Monetary Fund (IMF) as planned.
Analysts and dealers say Romania, which runs a large current
account deficit, may need its own aid package to restore
confidence.
"Investors have lost confidence in the currency," one
Bucharest dealer said. "The leu can go as far as the central
bank wants; nobody knows at what level the central bank would
start losing its patience and intervene."
The central bank intervened against leu falls in December,
but has since stayed away, dealers say.
Currency weakness and nagging inflation has also limited the
central bank's scope for joining the regional trend of cutting
interest rates to counter a collapse in global demand for the
area's exports. Data on Tuesday showing Romania's annual
inflation rate eased to 6.3 percent in December from 6.7 percent
may lift some concerns. []
In other trade, the Czech crown <EURCZK=> dipped to 26.91
per euro, and the Serbian dinar <EURRSD=>, which has also hit
new lows in the past week, was up 0.4 percent at 92 per euro in
choppy trade.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.91 26.7 -0.78% -0.58%
Polish zloty <EURPLN=> 4.156 4.089 -1.61% -0.99%
Hungarian forint <EURHUF=> 283.85 281.31 -0.89% -7.15%
Croatian kuna <EURHRK=> 7.335 7.339 +0.05% +0.41%
Romanian leu <EURRON=> 4.327 4.315 -0.28% -7.22%
Serbian dinar <EURRSD=> 92.0 92.341 +0.37% -2.74%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -29 basis points to 117bps over bmk*
4-yr T-bond CZ4YT=RR 0 basis points to +144bps over bmk*
8-yr T-bond CZ8YT=RR +1 basis points to +116bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -5 basis points to +322bps over bmk*
5-yr T-bond PL5YT=RR -10 basis points to +265bps over bmk*
10-yr T-bond PL10YT=RR -8 basis points to +229bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +11 basis points to +853bps over bmk*
5-yr T-bond HU5YT=RR +10 basis points to +825bps over bmk*
10-yr T-bond HU10YT=RR +11 basis points to +652bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1047 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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emerging market news []
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(Reporting by Reuters bureaus, writing by Jason Hovet, Editing
by Ruth Pitchford)
