(Updates throughout, adds dateline)
By Jason Hovet and Dagmara Leszkowicz
PRAGUE/WARSAW, Feb 12 (Reuters) - Central European
currencies retreated on Thursday, hurt by investor risk aversion
after a cool reception to U.S. bank bailout plans and negative
data piling up in the region.
Hungary sold 20 billion forints ($87.40 million) worth of
government bonds in its first auctions since last October -- a
first step to rejuvenate local markets that have been depressed
since the global financial crisis hit the region last autumn.
The forint <EURHUF=> had dropped 1 percent by 1406 GMT and
tested 300 to the euro, while bond yields were mixed but slipped
slightly from morning levels and from yields seen in auctions.
The country's debt agency said it was considering
re-starting regular auctions to boost markets. []
"If the forint goes beyond 300, the bond market will react
nervously; it has been a pattern recently that we move in tandem
with the forint," one trader said.
In Poland, the zloty <EURPLN=> was off 1.2 percent from
Wednesday's domestic close, bid at 4.619 per euro.
A currency rally last week has withered due to rising risk
aversion, signs of a deepening global recession and fears U.S.
stimulus packages may be slow to help. []
Bond markets, like in the Czech Republic, have also been
under pressure from rising credit default swap (CDS) prices in
the past month -- a trend seen around Europe. []
And fresh round of data has showed further deterioration in
the central Europe's export-strong economies.
"The trend is still up (to weaker exchange rate levels),
said a Prague trader, adding economic problems are at a start.
On Thursday, Poland's Labour Ministry said unemployment had
risen 1 percentage point to 10.5 percent in January, the fastest
jump in seven years and highest among the region's EU members.
BETS DOWN
Romanian inflation climbed to 6.7 percent in January and
unadjusted industrial output plunged 18 percent annually in
December, underlining a dilemma of trying to ease interest rates
to help the economy when prices are still growing.
Analysts said inflation had been boosted by a 6.5 percent
decline in the currency since the beginning of the year. The leu
<EURRON=> dipped 0.5 percent to 4.302 per euro on Thursday.
"Except for occasional interventions on the currency market,
the (central bank) has very limited tools to fight the
pass-through mechanism," Bartosz Pawlowski at TD Securities
said.
In Serbia, the central bank left rates on hold on Thursday
but changed rules on mandatory reserves and loan-to-capital
ratios, encouraging banks to expand credit activity and boost
economic growth. []
The dinar <EURRSD=> lost 0.9 percent to 93.44 to the euro,
while the Czech crown <EURCZK=> fell to 28.653 per euro.
The Czech current account deficit widened more than expected
in December, data showed on Thursday, but while it was still too
low to cause concerns, it could add to currency weakening,
analysts said. []
A Barclays note this week said the crown could fall to 29.5
in the next month, while Commerzbank recommended hedging
strategies on Wednesday to profit from a falling zloty, saying
further declines are likely. []
TD Securities also recommended staying long the euro against
the forint as it saw a case for further weakening
[].
Dealers and analysts said worsening Russian data on foreign
exchange reserves could also hit risk appetite.
Russia's central bank said early on Thursday its exchange
reserves fell to 383.5 billion dollar on February 6 from 388.1
billion in the previous week.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 28.653 28.513 -0.49% -6.63%
Polish zloty <EURPLN=> 4.619 4.566 -1.15% -10.91%
Hungarian forint <EURHUF=> 298.57 295.67 -0.97% -11.73%
Croatian kuna <EURHRK=> 7.43 7.42 -0.13% -0.87%
Romanian leu <EURRON=> 4.302 4.279 -0.53% -6.69%
Serbian dinar <EURRSD=> 93.443 92.591 -0.91% -4.24%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -9 basis points to 163bps over bmk*
4-yr T-bond CZ4YT=RR +17 basis points to +153bps over bmk*
8-yr T-bond CZ8YT=RR +3 basis points to +249bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +19 basis points to +954bps over bmk*
5-yr T-bond HU5YT=RR +9 basis points to +842bps over bmk*
10-yr T-bond HU10YT=RR +6 basis points to +674bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1508 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 Jason
Hovet/Dagmara Leszkowicz)
