* Currencies down following drop in stocks, led by forint
* Further data darkens regional outlook
* Any announcement on Romania's bailout may move leu
(Adds fixed income, quote)
By Dagmara Leszkowicz
WARSAW, March 12 (Reuters) - Emerging European currencies
fell against the euro on Thursday, reversing a recent rally as
sentiment soured, led by the Hungarian market where investors
tested the central bank's resolve to defend the forint.
Equities in Europe were retreating, indicating a rise in
risk aversion, and Hungary posted trade figures suggesting that
its economic downturn may be steeper than expected.
At 0944 GMT the forint <EURHUF=> was 1.6 percent down
against the euro at 305.0, while the Polish zloty <EURPLN=> and
the Czech crown <EURCZK=> weakened 0.4 percent and 0.3 percent
against the common currency respectively.
The region's currencies have been tightly correlated during
most of the past months' falls but the forint has been hardest
hit due to Hungary's relatively weak fundamentals.
Hungary posted a trade deficit of 191.6 million euros in
January, data from the Central Statistics Office showed.
Analysts had expected a balanced trade account.
Dealers said a speculative reversal of positions by some big
foreign players caused the forint's latest swing.
Earlier this week it surged from record lows at 317.45 last
week, after central bank (NBH) Governor Andras Simor hinted at
market intervention.
"(Investors) are testing the levels where the NBH would step
in," one dealer said. "I think they should take decisive step to
hit speculators who beat the forint to trigger a wave of stops."
One dealer said the NBH would step in only at weaker levels.
Simor said late on Wednesday, when the forint was near 300,
that he was satisfied with the forint's firming.[]
Analysts said the region's currencies would continue to be
driven by global sentiment. But any more comments from central
bankers in the region, indicating that they are more likely to
pause in cutting interest rates, could also have an effect.
"It depends on the hawkishness and action of central banks
in the region," said Simon Quijano-Evans, CEE economist for
broker Cheuvreux. "There doesn't seem to be a meaningful
turnaround in global sentiment yet."
Gross domestic product data on Wednesday showed central and
east European economies have entered a more severe downturn than
was apparent just weeks ago as their key export markets in the
west collapse and domestic demand plunges. []
Currencies have reversed sharply from record highs last
summer, and on Wednesday Polish regulators said the country's
firms faced a $5 billion exposure to soured currency derivatives
after the zloty lost a third of its value. []
However, some dealers said the depreciation trend may end
soon as currencies in the region are strongly undervalued.
"I think that if the zloty stays below 4.65 for some time,
it may signal strong depreciation is about to finish," said
Lukasz Wojtkowiak, FX dealer at Millennium bank in Warsaw.
In Romania, which this week became the third EU member to
request external aid, dealers said the leu <EURRON=> could be
moved near-term by the announcement of the amount the country
plans to get from the EU, IMF and other financial institutions.
On Wednesday IMF officials started a two-week mission in
Romania. The leu, which has held relatively steady compared with
its peers in recent weeks, was slightly down at 4.281 per euro.
The bonds market was weaker compared with the previous day
and traders said paper in the region is tracking falling
currencies.
"Due to the falling zloty one may expect a profit taking at
Thursday session," said Tomasz Bielanowicz, trader at PKO BP.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.115 27.042 -0.27% -1.34%
Polish zloty <EURPLN=> 4.619 4.602 -0.37% -10.91%
Hungarian forint <EURHUF=> 305 300.13 -1.6% -13.59%
Croatian kuna <EURHRK=> 7.411 7.408 -0.04% -0.62%
Romanian leu <EURRON=> 4.28 4.283 +0.07% -6.21%
Serbian dinar <EURRSD=> 94.54 94.433 -0.11% -5.35%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +8 basis points to 231bps over bmk*
4-yr T-bond CZ4YT=RR +1 basis points to +269bps over bmk*
8-yr T-bond CZ8YT=RR +4 basis points to +303bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +428bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +382bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +313bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -22 basis points to +1177bps over
bmk*
5-yr T-bond HU5YT=RR -56 basis points to +1055bps over
bmk*
10-yr T-bond HU10YT=RR -43 basis points to +851bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 0944 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; Editing by Toby Chopra)
