(Updates throughout, adds dateline)
By Jason Hovet and Marius Zaharia
PRAGUE/BUCHAREST, Jan 20 (Reuters) - The Hungarian forint
hit a record low against the euro on Tuesday and the Polish
zloty fell through another key level as more poor economic data
added to already fragile sentiment for emerging market assets.
The Czech crown tracked the region's losses to hover near
its lowest since August 2007, while Romania's leu bucked the
trend with the help of more covert central bank intervention.
Central Europe's currencies have weakened sharply at the
start of 2009 as data points to a sharper than expected slowdown
in the region after a collapse in demand from the hard-hit euro
zone.
The latest data came from Poland, where a worse than
expected 4.4 percent fall in industrial output last month
bolstered the case for deep interest rate cuts. []
The zloty <EURPLN=> fell 1 percent from Monday's levels to
4.34 per euro, passing the key 4.35 level earlier and sticking
around more than 4-year lows. By 1522 GMT the forint <EURHUF=>
had steadied at 284.25 per euro, after earlier touching a record
low of 288.3, while bond yields were little changed.
"The country-specific factor (in Hungary) is that the
(central bank) is cutting interest rates and some people expect
it to continue that even more aggressively," one dealer said,
adding overall poor sentiment in international and emerging
markets also dragged on the currency.
Hungary's central bank cut its key rate to 9.5 percent on
Monday, reversing two-thirds of an emergency 300 basis points
hike in October, and signalled it was ready for further easing
if financial stability allowed. []
Analysts said the forint's weakness may limit the room for
easing, but central bank Vice-Governor Ferenc Karvalits said the
falling forint was not a concern for the bank and the monetary
council was only watching long-term trends.
In Poland, a central banker was quoted as saying on Tuesday
the bank should move in a way that will not speed up the zloty
weakening. []
The Czech crown <EURCZK=> pared losses to fall 0.3 percent,
tracking regional peers. Dealers said it has lost traditional
support from corporate hedging as the economic outlook darkens.
November retail sales came in worse than expected on
Tuesday, encouraging the view that the Czech economy could
follow Hungary's into recession. []
"The world is still short EURCZK, and the outlook is really
gloomy," one dealer in Prague said.
But in Romania, seen as one of the riskier economies in the
global economic crisis, the leu <EURRON=> rose 1 percent from
session lows against the euro, with dealers saying the central
bank intervened indirectly in the market. []
In Serbia, where the deputy prime minister said on Tuesday
the country will avoid recession this year, the dinar <EURRSD=>
was steady. []
The EBRD said on Tuesday that economic growth in emerging
Europe will fall close to zero. []
Some economies, notably in the Balkans, have also been hit
from a disruption of Russian gas supplies due to a pricing
dispute with Ukraine. But on Tuesday deliveries started making
their way to Europe again after a two-week halt. []
Regional currencies have been pummelled over the last months
as the deepening global economic crisis forced central banks to
cut rates and signal more easing, while recession fears mounted.
Analysts expect a 50 basis points rate cut in Poland in
January and in the Czech Republic next month, while Romania,
which so far has been outside the regional trend, is also seen
cutting rates by 25-50 basis points.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.724 27.65 -0.27% -3.5%
Polish zloty <EURPLN=> 4.34 4.295 -1.04% -5.18%
Hungarian forint <EURHUF=> 284.25 284.3 +0.02% -7.28%
Croatian kuna <EURHRK=> 7.405 7.393 -0.16% -0.54%
Romanian leu <EURRON=> 4.316 4.293 -0.53% -6.99%
Serbian dinar <EURRSD=> 94.318 94.328 +0.01% -5.13%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +14 basis points to 115bps over bmk*
4-yr T-bond CZ4YT=RR 0 basis points to +92bps over bmk*
8-yr T-bond CZ8YT=RR -5 basis points to +96bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -3 basis points to +748bps over bmk*
5-yr T-bond HU5YT=RR +10 basis points to +713bps over bmk*
10-yr T-bond HU10YT=RR -15 basis points to +536bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1624 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
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(Reporting by Reuters bureaus, writing by Marius Zaharia and
Jason Hovet)
