* Zloty loses before current account data
* Emerging currencies firm vs euro on positive global mood
* Investors eye rate-setting meetings in Romania, Poland
(Recasts with zloty, updates prices)
By Luiza Ilie and Jason Hovet
BUCHAREST/PRAGUE, March 30 (Reuters) - The Polish zloty
dropped on Wednesday, underperforming in emerging Europe as
investors sold before the release of current account data on
Thursday that could show the emergence of a "twin deficit".
HSBC recommended on Wednesday selling the Polish currency
against the euro on risks the quarterly balance of payments data
could show a substantial upward revision of imports, increasing
the current account deficit.
Markets were unnerved last week when an adviser to the
Polish central bank governor said errors and omissions in
Poland's 2010 balance of payments data amounting to 4 percent of
GDP could be due to underestimated imports. []
[]
"A possible revision of the huge 'errors & omissions'
constitutes a threat to the PLN, particularly in the context of
a high fiscal deficit. Officials have given an indication that
such a revision may take place," HSBC said in a note.
"If it does, this will be PLN negative. The emergence of a
'twin deficit' would have a lasting negative impact on the PLN."
Dealers cited the note as the zloty <EURPLN=> fell in the
afternoon, bidding half a percent weaker on the day and above
the psychologically important 4.0 per euro level.
The zloty had just pierced that level this week after
steadily strengthening over the last two weeks, supported by
expectations of interest rate hikes and expected privatisation
flows.
Investors also ignored news the government would target
increasingly smaller fiscal deficits by 2014, while the
proportion of public debt to gross domestic product was seen
well below its legal 55 percent threshold. []
OTHER ASSETS STRONGER
Other emerging European currencies firmed against the euro
on better global risk appetite and rising stocks, with investors
readying for Romanian and Polish interest rate decisions.
"It's been a good day for the risk for the region," said one
trader in Bucharest. "And recent statements by central bank
officials that leu firming is mirroring a recovering economy
have also helped."
By 1448 GMT, the Romanian leu <EURRON=> had firmed 0.3
percent to 4.0970 per euro, rebounding after two days of profit
taking following a rise to a one-year high last week.
Stock markets gained strongly across the region, led by
Budapest <> which was up 1.3 percent on the day. The Czech
crown <EURCZK=> was steady.
Romania's central bank is widely expected to keep interest
rates unchanged at 6.25 percent at its meeting on Thursday and
may yet go against expectations of rate easing this year as
inflation stays high. [] <RO/POLL2>
The Hungarian forint <EURHUF=> firmed 0.3 percent on the
day, and bond yields dropped following a switch auction.
Three-year bonds traded at yields of 6.75 percent, down 8
basis points and the lowest in five months.
The central bank said on Wednesday it has cut its forecast
for economic growth in 2012 to 3 percent, citing weak lending
and investment and the impact of planned steps to reduce the
budget deficit. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.53 24.523 -0.03% +1.92%
Polish zloty <EURPLN=> 4.009 3.994 -0.37% -1.27%
Hungarian forint <EURHUF=> 267.00 267.82 +0.31% +4.11%
Croatian kuna <EURHRK=> 7.374 7.382 +0.11% +0.08%
Romanian leu <EURRON=> 4.106 4.12 +0.34% +3.09%
Serbian dinar <EURRSD=> 103.53 103.49 -0.04% +2.32%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -6 basis points to -5bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +64bps over bmk*
10-yr T-bond CZ9YT=RR +8 basis points to +70bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -7 basis points to +461bps over bmk*
5-yr T-bond HU5YT=RR -3 basis points to +429bps over bmk*
10-yr T-bond HU10YT=RR -8 basis points to +380bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1650 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus; Writing by Luiza Ilie; Editing
by Catherine Evans and Susan Fenton)
