(Corrects day of Swiss central bank decision in lead to
Thursday from Friday)
By Sandor Peto
BUDAPEST, March 13 (Reuters) - Emerging European currencies
firmed on Friday and may book further gains later in the session
in the aftermath of Thursday's announcement by the Swiss central
bank that it would sell the Swiss franc.
The move weakened the franc and helped Central European
currencies whose sharp weakening has threatened to push
households -- notably in Poland and Hungary -- into default on
foreign currency loans, many taken out in the Swiss currency.
"The Swiss central bank's moves are supportive for the
region's outlook when CHF loans are the biggest threat both for
banks and borrowers," analysts at BPH in Warsaw wrote in a
morning note.
Dealers said that after Thursday's wild swings, the region's
currencies could post further gains on Friday, when market
liquidity is usually low, in the absence of bad new for the
global economy's outlook and if sentiment on equity markets
remains positive.
Central Europe's currencies have taken a heavy beating in
recent months, on concerns these economies are reliant on
foreign financing and exports, and the drastic slowdown or slide
into recession caused by the global economic crisis.
Hungary's forint <EURHUF=> which led Thursday's swings
firmed 1.14 percent by 0811 GMT from Thursday's domestic market
close, to 293.35 against the euro, its strongest levels in a
month.
The Polish zloty <EURPLN=> gained 1.48 percent to 4.456 per
euro, while the Czech crown <EURCZK=> firmed 1.39 percent to
26.355.
Romania's leu firmed by only 0.1 percent and dealers said it
was likely to stay in tight ranges until the country announces
the results of talks with an International Monetary Fund
delegation on an aid package.
INTEREST RATE FOCUS
The zloty was expected to firm further in the short-term as
it has broken through an important technical level at 4.48,
Bartosz Pawlowski, strategist at TD Securities in London said.
"Given this week's euphoria on the global market we think
that a potential break would pave the way for a quick move
towards 4.40, but bear in mind that macroeconomic foundations of
the recovery in PLN do not seem very strong," he said in a note.
Poland, the Czech Republic and Romania will publish January
current account figures on Friday, throwing some light on how
the global downturn has affected their external finances, and
Poland will also release February inflation figures.
Attention next week is likely to start turning towards
central bank interest rates in the region and further
indications that the banks would pause in interest rate cuts
could affect currencies.
Before the forint's recovery this week from record lows hit
at 317.45 on Friday, Hungary's central bank (NBH) said the
currency's weakness could threaten inflation targets.
Dealers in Budapest and London were split over whether the
bank had intervened in the market.
Hungarian government bonds surged in early trade, with
yields dropping by around 50 basis points after the country's
debt agency said late on Thursday it aimed to buy back large
amounts of bonds expiring 2010-2012, to help the market from
which foreign investors have cut exposure since October.
[]
"These comments provided short-end bonds with strong
support," one trader said.
The Romanian central bank's chief economist Valentin Lazea
told Reuters late on Thursday that the financial aid package for
Romania could fall in a range close to 7.4 billion to 16 billion
euros. []
It's all about managing expectations," said Ulrich
Leuchtmann of Commerzbank in Frankfurt. "Something below 10
(billion euros) would clearly be a disappointment."
"But usually the statements from countries at first give
relatively low indications and the actual amount is a surprise
to the upside," he added.
Dealers have said that the leu, which has been relatively
stable compared to its peers in recent weeks, would move only on
news of the amount of money Romania may get from the EU, IMF and
other financial institutions.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.355 26.721 +1.39% +1.51%
Polish zloty <EURPLN=> 4.456 4.522 +1.48% -7.65%
Hungarian forint <EURHUF=> 293.35 296.7 +1.14% -10.16%
Croatian kuna <EURHRK=> 7.45 7.435 -0.2% -1.14%
Romanian leu <EURRON=> 4.267 4.271 +0.09% -5.92%
Serbian dinar <EURRSD=> 94.478 94.468 -0.01% -5.29%
All data taken from Reuters at 0911 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Sandor Peto; Editing
by Jon Boyle)
