* FX weaken on emerging market fears, euro zone debt woes
* Zloty leads losses as rate outlook seen uncertain
* Stocks recoup recent losses, Hungary seen vulnerable
By Marton Dunai
BUDAPEST, Jan 6 (Reuters) - Emerging European currencies
extended this week's losses on Friday, with the Polish zloty
taking the lead on an uncertain interest rate outlook and with
investor unease growing over political unrest in Egypt.
Exacerbating losses, euro zone debt worries pummelled the
common currency and by proxy the assets of eastern European
Union countries, while the dollar touched one-month highs on
sound labour market data. []
"In the near term there are no factors that could strengthen
the zloty," a trader at a Warsaw bank said. "Interest rates
(could be supportive) but these (rate rises) are not certain."
The National Bank of Poland is seen raising rates multiple
times this year but analysts differ over the likely timing of
the hikes.
"The zloty is weaker also because of what is going on in
Egypt, and because of the recent rate hike in China, which
diminishes liquidity on the market (and) does not bode well for
emerging markets," the trader added.
By 0857 GMT, the zloty <EURPLN=> was half a percent weaker
against the euro, with the crown <EURCZK=> 0.3 percent lower and
the Hungarian forint <EURHUF=> down 0.1 percent. The Romanian
leu <EURRON=> was flat.
Stock markets recovered somewhat from steep recent losses,
which had all but erased 2011 gains and took a toll especially
in Budapest <>. The correction, however, did not mean the
slide would stop, Hungarian traders said.
"The pink veil (of optimism) seems to be lifting, and
comments from the past week and a half suggest our expectations
as to the efficacy of fiscal reforms are coming true," Equilor
Investments, which has been bearish on the likely reform plan,
said in a note to clients.
"There are still no signs of a marked will for spending
cuts," it added.
The government is expected to table the reforms by the end
of this month, although reports suggested the final measure may
not be announced until March, and the focus may shift towards
more revenue-side measures than had been expected.
[]
The government will hold a news conference later on Friday,
where it could reveal key details of the package.
"They had better come out with something convincing," a
dealer said. "If they disappoint, the forint will continue its
slide for sure."
In the Czech Republic, central bank minutes revealed a split
board, which could play into decreasing bets on aggressive
tightening as this week's inflation data was lower than
expected. []
"Given the fact that 'hawk' (Robert) Holman will be replaced
by a new member, (Lubomir) Lizal, it could decrease the
probability of central bank hikes and thus we see ... minutes as
slightly dovish," Komercni Banka traders said in a note.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.255 24.182 -0.3% +3.07%
Polish zloty <EURPLN=> 3.935 3.917 -0.46% +0.58%
Hungarian forint <EURHUF=> 272.35 272.05 -0.11% +2.07%
Croatian kuna <EURHRK=> 7.41 7.408 -0.03% -0.4%
Romanian leu <EURRON=> 4.263 4.262 -0.02% -0.7%
Serbian dinar <EURRSD=> 103.24 103.2 -0.04% +2.6%
All data taken from Reuters at 0957 CET.
Currency percent change calculated from the daily domestic
close at 1700 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 bureaux, writing by Marton Dunai; Editing
by Susan Fenton/Catherine Evans)
