* Polish budget news, C/A data dent investment outlook
* Regional stock markets also in the red
* Zloty's recent drop "not significant", says finmin
(Adds fresher quotes, background)
By Gergely Szakacs and Dagmara Leszkowicz
BUDAPEST/WARSAW, Sept 14 (Reuters) - Poland's zloty reversed
some of its previous losses on Monday after opening more than
two percent lower, pressured by recent news that its budget
deficit was likely to double next year.
Other currencies were also down, tracking the zloty
<EURPLN=>, with Hungary's forint <EURHUF=> losing 0.4 percent
and the Czech crown <EURCZK=> falling only slightly against the
common currency.
"The budget deficit for next year as well as worse than
expected current account data are working against a stronger
zloty," said Robert Kesicki, dealer at Kredyt Bank in Warsaw.
Last week, Poland laid out a planned 2010 budget deficit at
twice this year's projected shortfall, while its current account
surprised by sinking to a deficit of 565 million euros in July
from a surplus of 459 million in June.
Deputy Finance Minister Dominik Radziwill said later in the
day the recent zloty falls were not significant and were mostly
driven by poorer global sentiment towards emerging markets.
[]
Despite worse than expected recent data, the European
Commission revised its 2009 growth forecast for Poland upwards
to 1.00 percent growth from a previous prediction of a 1.4
percent contraction. []
At 1355 GMT, the zloty <EURPLN=> was down 0.5 percent to the
euro from its Friday close, recovering some ground after hitting
a seven-week low at 4.2444, past a key level of 4.2 on the back
of last week's bearish news flow and weaker global sentiment.
The zloty has lost 2.2 percent against the euro since the
government approved the budget bill for 2010.
The forint also regained some ground after earlier falls,
but still remained below its Friday close.
"We will continue to track the international trend, (but)
people are more cautious than earlier and the market is more
sensitive to negative (than positive) news," said one
Budapest-based dealer.
The Czech crown <EURCZK=> traded a touch weaker compared to
its Friday close, taking only a small hit from data showing a
continued slump in retail sales. <ECONCZ> Some analysts said
this could lead to one further interest rate cut.
Czech retail sales fell 4.9 percent year-on-year in July,
less than analysts had forecast, and the same pace as in June.
A central bank board member also said in a newspaper
interview that a further drop in Czech interest rates cannot be
excluded but the central bank is watching how much ammunition it
has left.
Polish bonds yields rose slightly, tracking the zloty, and
dealers said the long end of the curve was likely to be harmed
further by investor caution about the country's borrowing needs
next year.
In Hungary bonds reversed previous losses to regain late
Friday levels. Traders said expectations for central bank
interest rate cuts would continue to weigh on yields.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.442 25.435 -0.03% +5.15%
Polish zloty <EURPLN=> 4.186 4.167 -0.45% -1.7%
Hungarian forint <EURHUF=> 273.15 272.05 -0.4% -3.51%
Croatian kuna <EURHRK=> 7.325 7.328 +0.04% +0.55%
Romanian leu <EURRON=> 4.271 4.264 -0.16% -6.01%
Serbian dinar <EURRSD=> 93.32 93.42 +0.11% -4.11%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR -11 basis points to 187bps over bmk*
7-yr T-bond CZ7YT=RR +3 basis points to +191bps over bmk*
10-yr T-bond CZ10YT=RR +6 basis points to +190bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +396bps over bmk*
5-yr T-bond PL5YT=RR -3 basis points to +359bps over bmk*
10-yr T-bond PL10YT=RR 0 basis points to +303bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1455 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Gergely Szakacs
and Dagmara Leszkowicz; Editing by Ruth Pitchford)
