* FX mostly firmer; zloty leads, outperformance in sight
* Leu slips; Hungary bonds sell, yields up
By Jason Hovet
PRAGUE, Dec 30 (Reuters) - The Polish zloty hit a two-week
high to lead modest gains for central European currencies in
quiet end-of-year trade on Thursday, with some investors already
positioning for expected outperformance to start 2010.
The Hungarian forint also touched a two-week high and the
Czech crown was buoyed by the first rise in industrial output in
a more than a year, while Romania's leu slipped to a two-week
low on repatriation trade.
But dealers across the region said trading remained illiquid
before the new year that is seen ushering in further gains for
most markets in central Europe.
The zloty <EURPLN=> rose 0.4 percent to 4.125 to the euro by
1433 GMT and is seen firming the most of central Europe's
currencies next year, underpinned by stronger economic recovery.
[]
The zloty has led currencies in the fourth quarter with a
3.6 percent rise while the crown has lost 3.8 percent in that
time. The forint and leu have steadied since Oct 1.
But the Polish unit is still 20 percent down from 2008 highs
and has barely broken even this year, which many dealers and
strategists say leaves more space for outperformance especially
against the lower-yielding Czech crown.
The crown is seen starting 2010 weaker after the central
bank unexpectedly cut interest rates to a record low of 1
percent this month. Dealers said the zloty/crown cross in favour
of the Polish unit has gained interest. <PLNCZK=REU>
"It looks like some people are putting on more intra-region
trades," a Prague dealer said. "But the first week of the new
year will show whether this (zloty/crown) trade is for real."
Bartosz Pawlowski, a strategist at BNP Paribas, said he
favoured long zloty against the crown due to the rate
differential and subdued Czech economic growth. []
The crown <EURCZK=>, the only major central European
currency to gain this year, bid a touch down on the day at 26.29
to the euro on Thursday, but buoyed by the first year-on-year
rise in industrial output since September 2008. []
FINAL CALLS
Central European economies have shaken off the worst of
economic crisis in the last half of 2009, although high
unemployment and widening state budget deficits have tempered
the recovery brought by a renewal in foreign orders.
On Wednesday, Hungary posted only its second quarterly
current account surplus in 14 years in the third quarter with
exports rising for the first time in a year. []
The forint <EURHUF=> gained 0.5 percent to 271.5 to the
euro. Bonds, though, lost despite the government selling a
planned 50 billion forints in bonds on Thursday. [
Hungarian bond yields have risen 70-90 basis points since
October, but trade below 8 percent and are sharply down from 14
percent seen earlier this year. Dealers expect domestic buyers
to give a renewed boost to the market next year.
Other bond markets were quiet on Thursday, while stocks fell
0.5-1.0 percent in the last full trading day of the year.
Bourses, after a hammering in the financial crisis, have
gained sharply this year -- with more than 30 percent gains for
Prague <.PX> and Warsaw <.WIG20> and a 75 percent rise for
Budapest <.BUX> in 2009.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 26.404 26.365 -0.15% +1.32%
Polish zloty <EURPLN=> 4.125 4.14 +0.36% -0.24%
Hungarian forint <EURHUF=> 271.5 272.75 +0.46% -2.93%
Croatian kuna <EURHRK=> 7.291 7.293 +0.03% +1.01%
Romanian leu <EURRON=> 4.235 4.216 -0.45% -5.21%
Serbian dinar <EURRSD=> 95.91 96.28 +0.39% -6.7%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +16 basis points to 115bps over bmk*
7-yr T-bond CZ7YT=RR +1 basis points to +92bps over bmk*
10-yr T-bond CZ10YT=RR -9 basis points to +55bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +6 basis points to +584bps over bmk*
5-yr T-bond HU5YT=RR +4 basis points to +524bps over bmk*
10-yr T-bond HU10YT=RR +5 basis points to +461bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1536 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by Patrick Graham)
