* Currencies firm on Swiss cbank franc selling
* Czech C/A gap wider than expected
* Gains trimmed in mid-morning trade, but gains seen
(Adds bonds, new currency prices, dealer comment)
By Sandor Peto
BUDAPEST, March 13 (Reuters) - Emerging European currencies
firmed on Friday the day after the Swiss central bank announced
that it would sell the Swiss franc.
The move 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.
Central Europe's currencies have taken a heavy beating in
recent months on concerns their economies are reliant on foreign
financing and exports, and the drastic slowdown or slide into
recession caused by the global economic crisis.
The Czech Republic said it posted a current account deficit
of 1.52 billion crowns in January which compared with a market
forecast for a 0.1 billion crown surplus.[]
Poland and Romania will also publish current account data,
throwing some light on how the global downturn has affected
their external finances.
The Czech crown <EURCZK=> firmed 0.92 percent against the
euro by 0941 GMT from Thursday's domestic close, while the
Polish zloty <EUPLN=> gained 0.76 percent to 4.488.Hungary's
forint <EURHUF=> which led Thursday's swings firmed 0.3 percent.
The currencies gave up part of early gains in mid-morning
trade but dealers said the outlook was positive.
"This is some profit-taking and position adjustment but the
firming is likely to continue," one Budapest-based trader said.
Romania's leu was flat at 4.273 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.
Attention next week is likely to start turning towards
central bank interest rates. Further indications the banks might
pause 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.
Hungarian government bonds surged, 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."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.478 26.721 +0.92% +1.04%
Polish zloty <EURPLN=> 4.488 4.522 +0.76% -8.31%
Hungarian forint <EURHUF=> 295.8 296.7 +0.3% -10.9%
Croatian kuna <EURHRK=> 7.431 7.435 +0.05% -0.89%
Romanian leu <EURRON=> 4.273 4.271 -0.05% -6.05%
Serbian dinar <EURRSD=> 94.24 94.468 +0.24% -5.05%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +30 basis points to 230bps over bmk*
4-yr T-bond CZ4YT=RR -13 basis points to +261bps over bmk*
8-yr T-bond CZ8YT=RR -8 basis points to +303bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -11 basis points to +419bps over bmk*
5-yr T-bond PL5YT=RR -9 basis points to +367bps over bmk*
10-yr T-bond PL10YT=RR -10 basis points to +299bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -28 basis points to +1114bps over
bmk*
5-yr T-bond HU5YT=RR -67 basis points to +1013bps over
bmk*
10-yr T-bond HU10YT=RR -56 basis points to +796bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1041 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)
