* Forint at 5-wk high after repeated deficit pledge
* Currencies firm on easing signals from U.S. Fed
* Polish finance minister's comments curb gains on zloty
* Romanian unions to protest against austerity measures
(Adds fresh comments, prices)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, Sept 22 (Reuters) - The forint firmed to
5-week highs to the euro on Wednesday and Hungarian bonds rose
after a top government official said the country's 2011 deficit
would be below 3 percent of GDP.[]
Most currencies in the European Union's (EU) emerging
markets strengthened after the Federal Reserve raised
expectations it would print more dollars to help the U.S.
economy at a policy meeting on Tuesday. []
The crown<EURCZK=>, the forint<EURHUF=> and the
zloty<EURPLN=> rose in tandem, gaining 0.4 percent to the euro
by 1042 GMT, while the leu<EURRON=> firmed 0.1 percent. The
forint was bid at 278.82, slightly off 5-week highs hit at
278.29 earlier in the day.
The forint -- a regional underperformer in the past months
-- have been firming since the government announced earlier this
month that it would meet the EU's requirement to cut its deficit
to below 3 percent of GDP next year.
Economy Ministry Secretary of State Andras Karman said on
Wednesday that the deficit will be around 2.8 percent.
Retail sales also surprised with 1.7 percent annual rise in
sales after a 4.6 percent decline in June and dealers said the
market was giving the government the benefit of the doubt on its
commitment to budget austerity until after local elections next
month.
"No-one would care in a negative global mood, (but) markets
have given Hungary time," one Budapest-based fx dealer said.
Hungarian government bond yields fell 3-4 basis points ahead
of bonds auctions on Thursday. <HUISSUE>
DEFICIT, POLITICS LIMIT GAIN
Markets were dominated by broader global market movements
which encouraged investors to buy riskier assets.
But dealers said the zloty's gains were limited by a
surprisingly high forecast of this year's public sector deficit
from the finance minister.
"The rally on eurodollar lifted the region's units, although
moves were not as sharp as on the euro," said one Warsaw-based
dealer. "But the finance minister's comments hurt sentiment on
the zloty slightly."
Finance Minister Jacek Rostowski told a radio interview the
deficit could be above 100 billion zlotys this year, much higher
than previous estimates despite an improving economy. Analysts
said the figure amounted to rather more than 7 percent of gross
domestic product. []
Warsaw had previously estimated that the deficit, which
includes local government and state agencies' shortfalls, would
amount to 6.9 percent of GDP.
Political risks clouded the leu's outlook after Romania's
powerful opposition said it would file a no-confidence vote
against the government next month.
The measures, which include tax hikes and wage cuts, are a
key factor in securing Romania's IMF-led 20 billion euro aid
package but have battered the government's popularity.
Central Europe's main eqity indices were all in the red,
falling 0.3-0.8 percent as European stock markets also eased,
and traders said it was a risk that the U.S. equity market would
also have a weak session and curb risk appetite.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.542 24.644 +0.42% +7.24%
Polish zloty <EURPLN=> 3.936 3.953 +0.43% +4.27%
Hungarian forint <EURHUF=> 278.82 279.92 +0.39% -3.04%
Croatian kuna <EURHRK=> 7.283 7.284 +0.01% +0.36%
Romanian leu <EURRON=> 4.251 4.257 +0.14% -0.32%
Serbian dinar <EURRSD=> 105.2 105 -0.19% -8.86%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +1 basis points to 80bps over bmk*
7-yr T-bond CZ7YT=RR +12 basis points to +101bps over bmk*
10-yr T-bond CZ9YT=RR +13 basis points to +96bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +5 basis points to +391bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +371bps over bmk*
10-yr T-bond PL10YT=RR +4 basis points to +313bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -1 basis points to +585bps over bmk*
5-yr T-bond HU5YT=RR 0 basis points to +544bps over bmk*
10-yr T-bond HU10YT=RR +9 basis points to +456bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1242 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz/Sandor Peto; editing by Patrick Graham)
