* Zloty hit by govt-cbank row, drags region weaker
* EBRD most concerned about Baltics, Hungary
* Czech May industry data slightly worse than flash estimate
(Adds Polish fixed income data)
By Marius Zaharia
BUCHAREST, July 13 (Reuters) - Central European currencies
weakened on Monday, led by the Polish zloty, which was hit by
last week's dispute between the government and the central bank
over the use of the latter's 2009 profit.
Poland's government, which faces a struggle to bring its
escalating budget gap under control -- an issue which has put
pressure on the zloty over the past weeks -- said the central
bank should transfer its profit to state coffers. []
But the bank said although it wanted to help, it did not
anticipate any profit, casting doubt over the plans of the
government, which hoped the bank would earn more than 10 billion
zlotys this year.
"Continued signs of tension between the president, NBP (the
central bank) and the Polish government related to the use of
NBP profits for the budget, threaten in our view to see the
zloty underperform," UniCredit said in a morning note.
Governments across the region have seen their budget
deficits ballooning this year because of plunging revenues due
to the economic downturn, which has increased worries about
financing them and has pressured currencies and stocks.
By 0930 GMT, the Polish zloty <EURPLN=> had fallen 0.8
percent from Friday's domestic close. The Hungarian forint
<EURHUF=> had eased 0.3 percent, while the Czech crown <EURCZK=>
and the Romanian leu <EURRON=> had lost 0.1-0.2 percent.
CLOSE BUT NO RECOVERY
Currencies have been regaining ground over the past months
helped by global hopes that a recovery was coming, but data last
week indicated the economic pain was far from fading out in
emerging Europe and depressed regional currencies.
Over the weekend, the head of the EBRD, one of the region's
main lenders, said the economic crisis was not over and within
the European Union he was most concerned about the Baltic
states, followed by Hungary. []
Thomas Mirow said financing problems for companies were
still a cause of concern. Those worries may put upside pressure
on CDS prices, especially in Hungary, Chevreux said in a note.
Markets were pricing in more international aid for the
region in the near-term to solve financing problems, but
Croatia, Bulgaria and Macedonia denied a report in a German
daily on Friday that they were among at least 10 countries in
the region in talks with the IMF. []
The Czech Republic opened a data-busy week by releasing
industrial output figures for May, which were slightly worse
than a flash estimate last month, posting a fall of 22 percent
on the year. []
"It's clear no stabilisation has taken place so far and
further declines will take place as indicated by miserable
orders," said CSOB's Petr Dufek. "Overall it is another number
that shows the second quarter GDP result will be very bad."
Hungary and Poland are due to publish June inflation figures
on Tuesday, while industrial production data are to be published
in Hungary on Wednesday and for Poland on Friday.
In debt markets, Hungarian bond yields edged 3-4 basis
points higher in quiet trade, while Polish bonds were flat.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.035 26.02 -0.06% +2.76%
Polish zloty <EURPLN=> 4.402 4.369 -0.75% -6.52%
Hungarian forint <EURHUF=> 278.01 277.22 -0.28% -5.2%
Croatian kuna <EURHRK=> 7.325 7.315 -0.14% +0.55%
Romanian leu <EURRON=> 4.221 4.214 -0.17% -4.89%
Serbian dinar <EURRSD=> 93.13 93.227 +0.1% -3.92%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -5 basis points to 158bps over bmk*
4-yr T-bond CZ4YT=RR +6 basis points to +183bps over bmk*
8-yr T-bond CZ8YT=RR +9 basis points to +310bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +4 basis points to +406bps over bmk*
5-yr T-bond PL5YT=RR +8 basis points to +329bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +297bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +3 basis points to +770bps over bmk*
5-yr T-bond HU5YT=RR +5 basis points to +697bps over bmk*
10-yr T-bond HU10YT=RR +4 basis points to +595bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1230 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia,
editing by Stephen Nisbet)
