* Hungary Monetary Council says after 2 weekend meetings to
use all policy tools to support forint
* Hungary central bank says to channel EU funds to market
* Czech trade data disappoint
* Polish central bank governor says zloty's exchange rate
does not reflect fundamentals
(Adds Czech data, analyst, bonds)
By Krisztina Than
BUDAPEST, March 9 (Reuters) - The Hungarian forint and the
Polish zloty jumped after the open on Monday as central bank
statements initially boosted the units, but they quickly lost
early gains as the positive impact faded.
The Czech crown <EURCZK=> was also pulled stronger with the
Hungarian forint in early trade, but it pared gains after a
flood of data in the morning.
Trade data showed a sharp fall in exports for the fourth
month in a row and companies shed jobs at a much
faster-than-expected pace showing the central European economy
suffered heavily from the plunge in key foreign markets.
"I think the (Hungarian) central bank statement was enough
for this: to stabilise the exchange rate a few forints firmer
than Friday's low, this is roughly the impact of the verbal
intervention," said Mariann Trippon, analyst at CIB in Budapest.
Hungary's central bank said on Sunday that the forint's
depreciation in recent weeks was not justified by fundamentals
and it was ready to use its entire monetary policy tool kit to
normalise markets.[]
The statement, issued by the rate-setting Monetary Council
after it held two non-regular meetings over the weekend has been
the strongest move by the Hungarian bank so far to prop up the
forint which hit an all-time low <EURHUF=D2> on Friday.
The bank also said it would start channelling EU funds to
the market.
The Polish central bank governor said in Basel on Monday the
country's currency did not reflect fundamentals.[]
"People jumped at these (Hungarian) central bank comments,
so the market could get a breather, but the situation has not
changed," a Budapest-based currency dealer said.
"The central bank cannot defend the forint on its own."
Another dealer said the impact of the verbal intervention
has run out and the Hungarian bank may have to hike interest
rates next if the forint resumes its falls.
The forint<EURHUF=> traded 1.24 percent higher at 311.04
versus the euro at 0952 GMT, but retreating quickly from highs
of around 306 hit in early trade, while the zloty was 0.5
percent weaker from Friday's domestic close.
The Czech crown<EURCZK=> was 0.3 percent lower at 27.64
while the Romanian leu <EURRON=> traded 0.02 percent lower from
Friday's close.
ECONOMIC WOES
Unfavourable outlooks for central Europe's once-booming
economies, along with worries over some countries' high exposure
to foreign credit and banking stability have put the region's
currencies under heavy pressure this year.
This pressure is expected to stay as economies continue to
suffer.
"The crown is up and down right now related to the forint," a
Prague dealer said. "Economic figures were mixed this morning,
but its shows a worsening economy. The story is still weakening
in CE3 currencies."
Bond yields ticked up, and dealers expected more weakening
in the run-up to the Finance Ministry's first fixed-rate bond
auction since October scheduled for next week.
"Bonds would go on cheapening this week as we have first
fixed-coupon bond auction next week in half a year and bonds
still have some to catch up with recent poor bond auctions
results," Komercni Banka traders said in a note.
The Hungarian fixed income market was digesting comments
from the central bank over the weekend.
"It's not quite as gloomy as Friday, but the market is idle,
waiting for signs of the central bank acting on its words," a
dealer said. "There are almost no deals right now."
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.64 27.565 -0.27% -3.21%
Polish zloty <EURPLN=> 4.723 4.701 -0.47% -12.87%
Hungarian forint <EURHUF=> 311.04 314.9 +1.24% -15.27%
Croatian kuna <EURHRK=> 7.438 7.425 -0.17% -0.98%
Romanian leu <EURRON=> 4.287 4.286 -0.02% -6.36%
Serbian dinar <EURRSD=> 94.563 94.887 +0.34% -5.38%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -8 basis points to 256bps over bmk*
4-yr T-bond CZ4YT=RR -3 basis points to +254bps over bmk*
8-yr T-bond CZ8YT=RR -3 basis points to +317bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -12 basis points to +379bps over bmk*
5-yr T-bond PL5YT=RR -4 basis points to +320bps over bmk*
10-yr T-bond PL10YT=RR +1 basis points to +280bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -30 basis points to +1241bps over
bmk*
5-yr T-bond HU5YT=RR -62 basis points to +1116bps over
bmk*
10-yr T-bond HU10YT=RR -45 basis points to +930bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1051 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT
(Reporting by Krisztina Than; Editing by Victoria Main)
