* Currencies rebound, zloty leads gains
* ERM 2 talk in Bulgaria, Poland improves regional mood
* Data reflecting economic pain lingers
(Updates throughout)
By Marius Zaharia
BUCHAREST, July 9 (Reuters) - Central and eastern European
currencies rebounded on Thursday, while policymakers in Poland
and Bulgaria said their countries were fit to join the ERM 2
mechanism later this year, improving the regional mood.
Simeon Djankov, expected to become Bulgaria's finance
minister after the election over the weekend, said the Balkan
state will apply for ERM-2 entry in November. []
In Poland, Finance Minister Jacek Rostowski was quoted as
saying the zloty may be stable enough to enter the ERM-2 in the
second half of 2009. []
But he did not say when Poland would actually join the euro
zone's waiting room, which limited impact on the market.
"We highlight that both Poland ... and Bulgaria ... have
separately alluded to scope for 2009 ERM2 entry in the last 24
hours," UniCredit said in a note.
"We're not convinced that either will occur, on fiscal
grounds in Poland and balance of payments grounds in Bulgaria,
though at the margin (we) do see CEE EMU newsflow improving."
By 0930 GMT, the zloty <EURPLN=> had risen 1.3 percent,
Hungary's forint <EURHUF> had gained 0.5 percent, the Czech
crown <EURCZK=> had added 0.7 percent, while the Romanian leu
<EURRON=> was steady.
One dealer in Bucharest said Poland's successful $2 billion
10-year eurobond issue this week, oversubscribed fourfold is
finally being reflected in the currency market on the back of a
pick up in risk appetite, helping the zloty.
PAIN LINGERS
Data on Thursday did not immediately impact currencies as
they were broadly in line with market expectations, although
they did indicate that recession is still overhanging central
and eastern Europe.
Czech June inflation rose 1.2 percent on the year
[] and the country's June unemployment rose to 8
percent [].
"The situation remains quite serious," said Komercni Banka's
Jan Vejmelek. "The labour market continues to be negatively
affected by Czech companies' economic problems and unemployment
will go up further for another year."
Romanian industry output edged down on the month in May
[] and Hungary posted a slightly higher trade
surplus [].
"Overall, it is good news that the trade balance continues
to improve even though it is obviously a reflection of the
negative fact that domestic demand has collapsed," Danske Bank's
Lars Christensen.
Currencies came under pressure this week from a poor global
mood and data showing a recovery was not coming soon. On
Wednesday, they posted sharp losses after breaking technical
support levels.
In a broader picture, currencies have moved in tighter
ranges over the past months on the back of a recovery in risk
appetite compared with the start of the year.
All units are seen gaining over a 12-month horizon, with the
Polish zloty leading gains.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.877 26.061 +0.71% +3.39%
Polish zloty <EURPLN=> 4.36 4.418 +1.33% -5.62%
Hungarian forint <EURHUF=> 275.33 276.75 +0.52% -4.28%
Croatian kuna <EURHRK=> 7.351 7.337 -0.19% +0.19%
Romanian leu <EURRON=> 4.212 4.211 -0.02% -4.69%
Serbian dinar <EURRSD=> 92.867 92.406 -0.5% -3.65%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 164bps over bmk*
4-yr T-bond CZ4YT=RR -3 basis points to +179bps over bmk*
8-yr T-bond CZ8YT=RR +4 basis points to +313bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -15 basis points to +401bps over bmk*
5-yr T-bond PL5YT=RR -14 basis points to +320bps over bmk*
10-yr T-bond PL10YT=RR -9 basis points to +293bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -10 basis points to +777bps over bmk*
5-yr T-bond HU5YT=RR -9 basis points to +698bps over bmk*
10-yr T-bond HU10YT=RR -8 basis points to +590bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1230 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux, writing by Marius Zaharia;
Editing by Chris Pizzey)
