* Currencies firm on Swiss cbank franc selling
* Czech C/A gap wider, Romania's narrower than expected
* Gains trimmed in morning trade but sentiment positive
(Adds Romanian data, Polish central banker comments.)
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.
Stock markets in Europe also extended gains.
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.[]
Romania's deficit halved year-on-year, showing a fall in the
economy's main external vulnerability, but the abrupt change
caused concern the economic downturn will be harsh.[]
Polish central bank Governor Slawomir Skrzypek said the
zloty may continue appreciating, in reflection of the economic
fundamentals.[]
The Polish zloty <EUPLN=> gained 1.5 percent against the
euro by 1109 GMT from Thursday's domestic close, the Czech crown
<EURCZK=> firmed 1.2 percent, while Hungary's forint <EURHUF=>
which led Thursday's swings firmed only 0.4 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 and dealers said it was likely to
stay in tight ranges until the country announces the results of
talks with an International Monetary Fund 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 bond yields dropped after the 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.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.409 26.721 +1.18% +1.3%
Polish zloty <EURPLN=> 4.454 4.522 +1.53% -7.61%
Hungarian forint <EURHUF=> 295.55 296.7 +0.39% -10.83%
Croatian kuna <EURHRK=> 7.45 7.435 -0.2% -1.14%
Romanian leu <EURRON=> 4.271 4.271 0% -6.01%
Serbian dinar <EURRSD=> 94.21 94.468 +0.27% -5.02%
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 -37 basis points to +237bps over
bmk*
8-yr T-bond CZ8YT=RR -2 basis points to +308bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -8 basis points to +421bps over bmk*
5-yr T-bond PL5YT=RR -10 basis points to +365bps over bmk*
10-yr T-bond PL10YT=RR -13 basis points to +296bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -30 basis points to +1112bps over bmk*
5-yr T-bond HU5YT=RR -68 basis points to +1011bps over bmk*
10-yr T-bond HU10YT=RR -59 basis points to +793bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1209 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)
