* Hungary c.bank says to use all policy tools, EU funds to
support forint
* Polish c.bank chief says zloty undervalued
* FX pare initial gains, stocks see-saw with global peers
* Czech exports fall, adding to regional economic worries
* Romania looks more likely to seek IMF help
(Adds Romanian president, fixed income)
By Krisztina Than and Jason Hovet
BUDAPEST/PRAGUE, March 9 (Reuters) - Hungary's forint held
stronger against the euro on Monday, but slipped from highs with
the Polish zloty as markets were unconvinced over central bank
statements aimed at boosting the hard-hit currencies.
Emerging European currencies have dropped to new lows in the
past month on increasing worries over a darkening economic
outlook and some countries' exposure to foreign credit.
Romania's president said on Monday his country needs
external funding to prevent a financial crisis in its private
sector, but potential aid from the European Union must go hand
in hand with the International Monetary Fund. []
In the Czech Republic, the crown pulled back from morning
highs after data showed exports there dropped at the fastest
annual pace on record, while the forint and zloty shed gains
from central bank statements pledging support for currencies.
Hungary's central bank said on Sunday it was ready to use
its entire monetary policy tool kit to normalise markets, its
strongest move so far to prop up the forint which hit an
all-time low on Friday. []
The bank also said it would start channelling EU funds to
the market, mirroring a similar Polish move last month.
And in Basel, Polish central bank Governor Slawomir Skrzypek
said on Monday the country's currency was undervalued and the
bank was ready to intervene to prop it up. []
"The market is not really convinced on these statements,"
said Societe Generale emerging markets strategist Murat Toprak.
"The available tools of central banks are rather limited."
The forint <EURHUF=> bid 1.5 percent stronger from Friday's
closing levels at 309.6 versus the euro at 1552 GMT. It has lost
14.9 percent this year, exceeding its peers' 3-13 percent falls.
Poland's zloty <EURPLN=> was steady at 4.729 per euro and is
down 12.9 percent for the year. The crown <EURCZK=> gained 0.7
percent and after sharp gains last week is off just 2.9 percent
since Jan. 1.
"The crown is up and down right now related to the forint,"
a Prague dealer said. "Economic figures were mixed this morning,
but it shows a worsening economy. The story is still weakening."
Romania's leu <EURRON=> was down 0.1 percent since Friday,
and dealers said worries over central bank intervention have
tamed losses helping the currency outperform peers this year.
Prague and Warsaw's stock indices lost after world stocks
fell to 14-year lows, but cut some losses following a positive
U.S. open. []
HELP ON THE WAY
Markets increasingly are looking at Romania as becoming the
third European Union member to seek help from the IMF, and a
fund mission is headed there this week. []
EU leaders earlier this month brushed aside a Hungarian
proposal for a region-wide aid package that was also opposed by
stronger economies like Poland and Czech Republic, which have
tried to distance themselves from weaker neighbours.
A draft document before next month's G20 summit showed on
Monday the EU was set to back an IMF call for $500 billion to
fight the financial crisis. []
Central Europe's once-booming economies have seen falling
demand for their goods in the recession-hit euro zone, leaving
countries like Hungary and Romania vulnerable after they fuelled
past growth mainly with foreign credit and investment.
Hundreds of thousands of Hungarian and Romanian borrowers
have seen borrowing costs soar after seeking out loans in euros
or Swiss francs in past years due to higher domestic rates.
The zloty's loss of almost a third of its value against the
euro since summer highs has also pressured Polish companies that
had bet on a stronger unit using currency options.
Analysts say falling interest rates have accelerated
currency falls, and they expect a pause in easing cycles or in
some cases, like Hungary, hikes. But in Poland, analysts see
another quarter point cut this month. []
On bond markets, Hungarian and Czech yields ticked up, with
the latter adjusting more to recent poor auctions that raised
the cost the Czech government pays for borrowing.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.542 27.747 +0.74% -2.86%
Polish zloty <EURPLN=> 4.729 4.725 -0.08% -12.98%
Hungarian forint <EURHUF=> 309.62 314.32 +1.52% -14.88%
Croatian kuna <EURHRK=> 7.441 7.425 -0.22% -1.02%
Romanian leu <EURRON=> 4.298 4.285 -0.3% -6.6%
Serbian dinar <EURRSD=> 94.218 94.867 +0.69% -5.03%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -50 basis points to 214bps over bmk*
4-yr T-bond CZ4YT=RR -9 basis points to +247bps over bmk*
8-yr T-bond CZ8YT=RR -15 basis points to +305bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR 0 basis points to +1247bps over bmk*
5-yr T-bond HU5YT=RR -2 basis points to +1116bps over bmk*
10-yr T-bond HU10YT=RR -16 basis points to +911bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1655 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet/Krisztina
Than; editing by Stephen Nisbet/Victoria Main)
