* Currencies rebound from falls as dollar edges lower
* Zloty underperforms, hit by regional cross trades
(Recasts with new comments, prices)
By Marius Zaharia and Sandor Peto
BUCHAREST/BUDAPEST, April 24 (Reuters) - Central European
currencies rebounded on Friday after falls earlier this week but
the zloty <EURPLN=> underperformed due to concerns over Poland's
plans to join the euro zone.
The zloty has shed about 5.5 percent against the euro since
hitting a three-month high last week on the back of an expected
IMF flexible credit line.
It regained some ground on Friday as a retreat of the dollar
against the euro helped emerging currencies, but the zloty was
still weaker by half a percent from Thursday and more than four
percent over the week.
Investors bet earlier this month that the zloty could
outperform regional peers in the short term and built long zloty
positions which were probably partially reversed this week,
dealers said.
On Friday a deputy finance minister, Ludwik Kotecki, said if
the Poland's euro adoption timetable were to be delayed, it
could be a question of one year, or two in an extreme case.
The country is unlikely to join the European Exchange Rate
Mechanism (ERM-2) in the first half of 2009 but it can still
adopt the euro as planned in 2012, he added. []
A top aide to the prime minister has said the budget deficit
may reach 4.6 percent of GDP in 2009, well above the EU's 3
percent ceiling, a euro adoption condition. []
"I think the zloty will weaken next week towards 4.55-4.60
against the euro. The main reason for the weakening remains the
same - worries about potential budget revision," said Raiffeisen
Bank Polska dealer Marcin Grotek.
Hungary's forint <EURHUF=> firmed 0.7 percent against the
euro from Thursday in continued thin trade, though it was still
weaker by 0.2 percent over the week. The Czech crown gained 0.5
percent over the day and 0.1 percent over the week.
"One or two weeks ago there were recommendations to build
long zloty positions, which were reversed... not definitely only
in the spot market," one Budapest-based dealer said. "We even
heard about (players) sitting in short zloty-forint."
Political crises weighed down on the Hungarian and the Czech
currencies in the past weeks. The weight has eased now as Czechs
prepare to set up a new government and Hungary's new cabinet has
been in place for a week.
Sentiment also improved after a key survey of business
confidence in Germany, where most of the regions' exports go,
gave evidence of a tentative improvement. []
But the global crisis will continue to weigh on the
prospects of Central European states which are seen sliding into
recession or post small growth this year, while concerns over
inflation or financial stability hinder central bank interest
rate cuts. [] []
HUNGARIAN BONDS FIRM
Hungarian government bonds firmed, tracking the forint.
Hungary on Thursday sold almost all bonds offered in the
three auctions []. Analysts said it was another
positive signal following well-bid auctions in the Czech
Republic and Poland this month, and Hungary's debt agency plans
to continue regular auctions.
"Restoring regular auctions is a good first step, but we
need a rise in risk appetite in the world and a better outlook
for Hungary for the bond market to normalise," one trader said.
The country's new government has pledged spending cuts worth
1,300 billion forints for 2009 and 2010 to cut reliance on
IMF-led financing secured in October.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.745 26.884 +0.52% +0.03%
Polish zloty <EURPLN=> 4.491 4.468 -0.51% -8.37%
Hungarian forint <EURHUF=> 296.25 298.2 +0.66% -11.04%
Croatian kuna <EURHRK=> 7.431 7.376 -0.74% -0.89%
Romanian leu <EURRON=> 4.231 4.244 +0.31% -5.12%
Serbian dinar <EURRSD=> 94.29 94.22 -0.07% -5.1%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -2 basis points to 177bps over bmk*
4-yr T-bond CZ4YT=RR -1 basis points to +187bps over bmk*
8-yr T-bond CZ8YT=RR +4 basis points to +291bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +412bps over bmk*
5-yr T-bond PL5YT=RR 0 basis points to +346bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +297bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -22 basis points to +875bps over bmk*
5-yr T-bond HU5YT=RR -58 basis points to +823bps over bmk*
10-yr T-bond HU10YT=RR -46 basis points to +719bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1544 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Marius Zaharia/Sandor
Peto; Editing by Ruth Pitchford)
