(Adds crown, zloty falls)
By Jason Hovet and Dagmara Leszkowicz
PRAGUE/WARSAW, Feb 12 (Reuters) - The Czech crown slipped to
a three-year low on Thursday and other central European
currencies also retreated, hurt by a cool global 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 1.2 percent by 1545 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=> slid 1.3 percent from
Wednesday's domestic close to put pressure on local bonds. The
crown <EURCZK=> fell beyond 28.8 to the euro, its lowest since
March 2006, before rebounding to 28.65.
"The trigger is still equity markets, and the euro is
falling," said an emerging foreign exchange trader at a
foreign-based bank. "It is old-fashioned risk aversion."
Central Europe's stock exchanges fell more than 2 percent.
U.S. stocks tumbled sending the euro to session lows, and
central Europe's currencies often track the common currency due
to their close connection to the euro zone economy.
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 a fresh round of data has showed further deterioration
in the central Europe's export-strong economies, not boding well
for Czech and Hungarian GDP due out on Friday.
"The trend is still up" (to weaker exchange rate levels),
said a Prague trader, adding economic problems are only just
starting.
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.
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 6.6 percent
decline in the currency since the beginning of the year. The leu
<EURRON=> dipped 0.5 percent to 4.3 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 1.2 percent to 93.73 to the euro.
In the Czech Republic, data showed the current account
deficit widened more than expected in December, which 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. []
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 28.651 28.513 -0.48% -6.62%
Polish zloty <EURPLN=> 4.626 4.566 -1.3% -11.05%
Hungarian forint <EURHUF=> 299.28 295.67 -1.21% -11.94%
Croatian kuna <EURHRK=> 7.436 7.42 -0.22% -0.95%
Romanian leu <EURRON=> 4.3 4.279 -0.49% -6.64%
Serbian dinar <EURRSD=> 93.728 92.591 -1.21% -4.53%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -15 basis points to 156bps over bmk*
4-yr T-bond CZ4YT=RR +36 basis points to +173bps over bmk*
8-yr T-bond CZ8YT=RR +4 basis points to +250bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +6 basis points to +400bps over bmk*
5-yr T-bond PL5YT=RR +15 basis points to +331bps over bmk*
10-yr T-bond PL10YT=RR +17 basis points to +295bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +21 basis points to +957bps over bmk*
5-yr T-bond HU5YT=RR +11 basis points to +844bps over bmk*
10-yr T-bond HU10YT=RR +8 basis points to +676bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1648 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Jason
Hovet/Dagmara Leszkowicz; Editing by Ruth Pitchford)
