* FX mixed after week of gains, partly on G20
* Reuters poll forecasts weakening in short term
(Recasts with new comments, prices, poll results.)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, April 3 (Reuters) - Central European
currencies retreated on Friday after a week of gains as the
dollar firmed, on signs that optimism following the G20 meeting
may have been overdone, analysts and dealers said.
The G20 summit of global leaders on Thursday added $500
billion to the International Monetary Fund's (IMF) firepower for
a total of $750 billion, soothing concerns about the financing
of emerging markets in eastern Europe. []
After the G20 decisions, currencies in the region had posted
strong gains, touching the firmest levels of the past few months
against the euro in early trade on Friday.
Poland's zloty <EURPLN=> was bid at 4.48 against the euro at
1430 GMT, 1.3 percent weaker than Thursday's domestic close,
while the Hungarian forint <EURHUF=> shed 0.6 percent to 296.25.
The Czech crown <EURCZK=> kept part of its gains and was bid
0.4 percent firmer at 26.54, while Romania's leu <EURRON=>
gained 0.7 percent to 4.169.
The currencies were still 2-4 percent firmer over the week.
Stock markets in the region also rose this week, while
credit default swaps (CDS) narrowed.
But market participants warned that the rise of investors'
appetite for risk could be fragile. If global sentiment worsens
again, the same concerns which pushed its currencies down
steeply after last summer could weigh on the region again.
The region's states rely heavily on exports and foreign
financing and have been hit by the global crisis. Their central
banks have tried to help the economies with rate cuts which
contributed to currency weakness. Hungary and the Czech Republic
are also struggling to end political crises.
These risks were highlighted by a late dip in the currencies
when the dollar rebounded against the euro after U.S. jobless
data. Dollar firming often pushes emerging market currencies
lower.
Romania this week joined Hungary in the club of countries
which received aid from the IMF. Hungarian debt was downgraded
by both Standard & Poor's and Moody's early this week, falling
to near junk status in the assessment of the former.
"After two downgrades, government bond yields fell by some
130 basis points. People should just stop and think a while now:
is this the right thing?," one Budapest-based bond trader said.
A Reuters poll of analysts showed that recession fears are
likely to consume the post-G20 gains of the region's currencies.
It will take several months for them to post lasting gains
if the light at the end of the tunnel is seen for the global
economy, the analysts said. []
"Even though the G20 in general is positive for the CEE
economies, the extra funds do not change the fact that we are
likely to see a very sharp further correction in growth in the
region to adjust the major external imbalances," Danske Bank
said in a weekly note on the region.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.54 26.635 +0.36% +0.8%
Polish zloty <EURPLN=> 4.48 4.422 -1.29% -8.15%
Hungarian forint <EURHUF=> 296.25 294.5 -0.59% -11.04%
Croatian kuna <EURHRK=> 7.416 7.453 +0.5% -0.69%
Romanian leu <EURRON=> 4.169 4.199 +0.72% -3.71%
Serbian dinar <EURRSD=> 93.74 94.248 +0.54% -4.54%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -8 basis points to +211bps over bmk*
4-yr T-bond CZ4YT=RR -22 basis points to +239bps over bmk*
8-yr T-bond CZ8YT=RR -6 basis points to +312bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -24 basis points to +985bps over bmk*
5-yr T-bond HU5YT=RR -60 basis points to +922bps over bmk*
10-yr T-bond HU10YT=RR -50 basis points to +787bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1630 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/Sandor Peto; editing by David Stamp)
