* Currencies in heavy swings
* Units rebound as Swiss cbank says buys foreign currencies
* Forint firms near 4 pct from intra-day low
* Leu decouples from swings on Romania IMF talks
(Adds Hungary central bank statements, updates prices.)
By Dagmara Leszkowicz and Sandor Peto
WARSAW/BUDAPEST, March 12 (Reuters) - Emerging European
currencies firmed on Thursday, with Hungary's forint and
Poland's zloty reversing sharp losses after the Swiss central
bank (SNB) sold francs and cut interest rates.
The Swiss move boosted central Europe's markets on the
prospect that it might give relief to hundred of thousands in
Hungary and Poland that have borrowed in Swiss francs or euros
and have suffered as those currencies have strengthened.
"I think the (region's) market is driven by the
interventions in euro-Swiss. That's giving strength through the
whole market," a central European currency trader in Stockholm
said. "The cross in Swiss-zloty or Swiss-forint is quite
important for local banking."
The Swiss franc tumbled after the SNB announcements.
Dealers said a retreat by the yen <JPY=> after
better-than-expected U.S. retail data also helped currencies in
emerging markets, while sentiment in equity markets in the world
also improved.
Dealers in Budapest and London were split over whether the
Hungarian central bank had intervened in the market over the
past few days to help the forint which has firmed from record
lows hit at 317.45 on Friday.
"The bank does not wish to comment on market rumours about
intervention," the bank's press office said in a statement.
It also said in a separate statement that it expected to
convert net transfers from the European Union worth 2.4 billion
euros in the market this year.[]
The bank earlier said it would start to channel EU funds
into the market and was ready to use its entire monetary policy
tool kit to help the forint which had fallen to levels which
pose a threat to financial stability in the long term.
NBH Governor Andras Simor said on Tuesday that the bank was
active in the currency market, although no dealer contacted by
Reuters was able to say they had actually seen it make a deal.
Hungary's forint <EURHUF=>, which led losses for central
European currencies earlier was 1.15 percent firmer on the day
at 296.71 against the euro by 1603 GMT, and firmer by almost
four percent from its intra-day low at 308.31.
Poland's zloty <EURPLN=> gained 1.5 percent to 4.533 and the
Czech crown <EURCZK=> firmed 1.1 percent to 26.749.
The region's currencies have been sliding for months due to
concern over the reliance of these economies on exports and
foreign financing, and the forint has been worst hit due to the
relatively weaker fundamentals of the country.
OUTLOOK GLOOMY
The leu <EURRON=> was less volatile, firming by 0.3 percent
at 4.271 against the euro on the second day of Romania's
negotiations on a potential rescue package with the
International Monetary Fund.
The leu showed little reaction to trade data, released
earlier on Thursday, which showed the trade deficit shrinking
60.3 percent on the year in January and signalled Romania's main
economic headache was adjusting. []
It was also unaffected by comments from Finance Minister
Gheorghe Pogea that Romania could have economic growth of
between -1 percent and +1.5 percent this year, down from an
official estimate of 2.5 percent growth.
Economic figures continue to depict a gloomy outlook for the
region's economies, weighing on currencies.
Hungary posted a trade deficit of 191.6 million euros in
January, compared with analysts' forecast for a balanced trade
account, and the figures indicating deepening recession
contributed to the forint's early plunge.
Gross domestic product data on Wednesday also showed the
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. []
Analysts said the chief driver remained global sentiment
toward risk and emerging markets, but that any indication that
central banks were 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."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.749 27.042 +1.1% +0.01%
Polish zloty <EURPLN=> 4.533 4.602 +1.52% -9.22%
Hungarian forint <EURHUF=> 296.71 300.13 +1.15% -11.18%
Croatian kuna <EURHRK=> 7.428 7.408 -0.27% -0.85%
Romanian leu <EURRON=> 4.271 4.283 +0.28% -6.01%
Serbian dinar <EURRSD=> 94.603 94.433 -0.18% -5.42%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -22 basis points to 201bps over bmk*
4-yr T-bond CZ4YT=RR -2 basis points to +265bps over bmk*
8-yr T-bond CZ8YT=RR +19 basis points to +317bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +433bps over bmk*
5-yr T-bond PL5YT=RR +6 basis points to +384bps over bmk*
10-yr T-bond PL10YT=RR +5 basis points to +319bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -16 basis points to +1168bps over
bmk*
5-yr T-bond HU5YT=RR -52 basis points to +1049bps over
bmk*
10-yr T-bond HU10YT=RR -41 basis points to +838bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1703 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, Writing by Sandor Peto;
Editing by Toby Chopra and Patrick Graham)
