By Marius Zaharia and Sandor Peto
BUCHAREST/BUDAPEST, Dec 31 (Reuters) - Central European
currencies closed mixed in the last session of 2008, posting
heavy losses for the year as a whole when the global crisis hit
the region's economies and increased risk aversion.
Concerns over growth coupled with inflation falls are seen
further fuelling central bank interest rate cuts in the region,
possibly weighing on exchange rates in the new year with further
risk arising from local and global developments.
"The same stories will continue, we will watch the news of
the global crisis, and if the currency can firm, further rate
cuts will come," one Budapest-based dealer said.
Another trader said: "I'm pessimistic over economic figures
and the markets, and equities can also fall further next year."
On Wednesday the region's currencies shrugged off further
downbeat economic data in thin trade.
The forint <EURHUF=> firmed 0.64 percent against the euro to
265.70, though Hungary posted a current account deficit of 2.492
billion euros in the third quarter, well above analysts'
forecast for 1.64 billion euros.[]
Romania's leu <EURRON=> was flat at 4.018, up from a
four-year low of 4.098 per euro touched earlier this week,
though new Prime Minister Emil Boc said the 2008 budget deficit
may reach 5 percent of GDP, compared with a recent 3.5 percent
forecast and a 2.3 percent target [].
Poland's zloty <EURPLN=> firmed 0.77 percent to 4.144 after
an almost continuous slide for weeks caused by the closing of
derivatives deals, while the Czech crown <EURCZK=> lost 1.07
percent to 26.818.
Serbia's dinar <EURRSD=> was flat at 89.595 per euro after
the central bank continued to sell euros to defend the currency.
[]
The kuna <EURHRK=> shed 0.61 percent to 7.378, after figures
which showed Croatia's industrial output falling 3.5 percent in
annual terms in November, while the trade deficit narrowed to
776 million euros from 1.019 billion euros in October.
Dealers and analysts said the region's currency and fixed
income markets were likely to remain volatile in the new year.
The currencies surged for most of 2008, but the global
crisis wiped out their gains and pushed them into the red.
The zloty has lost 15 percent in year-on-year terms, the
dinar 14 percent, the leu 12 percent, the forint five percent
and the Czech crown and the kuna about one percent.
Economic growth has slowed down in the export-reliant
region, putting equity prices under pressure. Calls for lower
interest rates have strengthened though the currencies have
weakened, and the same trends are seen continuing.[]
"We maintain a neutral position on the bond segment, as
falling interest rates should support the bond markets. At the
same time, some currencies may trend even weaker in the first
quarter," said Raiffeisen in a note on the region's markets.
"It still seems too early to go with a general overweight
stance on the bond segment, as the strong risk aversion
continues to work in favour of US and euro area government
bonds."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2008
Czech crown <EURCZK=> 26.818 26.535 -1.07% -1.21%
Polish zloty <EURPLN=> 4.144 4.176 +0.77% -15.1%
Hungarian forint <EURHUF=> 265.7 267.41 +0.64% -5.08%
Croatian kuna <EURHRK=> 7.378 7.333 -0.61% -0.7%
Romanian leu <EURRON=> 4.018 4.017 -0.02% -12.23%
Serbian dinar <EURRSD=> 89.595 89.595 0% -13.76%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -11 basis points to 175bps over bmk*
5-yr T-bond CZ5YT=RR +10 basis points to +164bps over bmk*
10-yr T-bond CZ9YT=RR -2 basis points to +125bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -49 basis points to +786bps over bmk*
5-yr T-bond HU5YT=RR -56 basis points to +727bps over bmk*
10-yr T-bond HU10YT=RR +6 basis points to +561bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1422 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia;
Editing by Mike Peacock/Tony Austin)
