* Forint hits 2009 low, zloty and leu hit one-week lows
* Region hurt by Greece's fiscal woes []
* Markets watch Poland's privatisation drive
(adds fixed income, detail)
By Marius Zaharia
BUCHAREST, Jan 21 (Reuters) - The Hungarian forint hit this
year's lowest level against the euro on Thursday, with investors
running for safer assets as worries about Greece's ability to
finance its vast budget deficit loom over emerging Europe.
After a strong start this year, currencies were pumelled
this week by worries about Greece's deteriorating finances that
reminded investors about the region's fiscal imbalances and
raised concerns about a spillover in some of the emerging
European countries where Greek banks are exposed.
"Emerging European currencies would likely feel the greatest
pinch," Barclays Capital said in a note.
"There are more direct avenues of spillover from Greece to
Emerging Europe, especially the smaller economies of Bulgaria,
Macedonia, Albania and Romania, where trade linkages with Greece
dovetail with the financial sector links to Greek banks."
Analysts also say that Greece would be used as a negative
example in talks about euro zone expansion and could complicate
the race of countries like Romania, Poland and Hungary to adopt
the common currency in the first half of this decade.
At 1102 GMT, the forint <EURHUF=> was 0.4 percent weaker on
the day at 272.3, after hitting 272.76 earlier in the session,
its lowest level this year.
The Polish zloty <EURPLN=> was 0.6 percent weaker, while the
Romanian leu <EURRON=> was down 0.2 percent. Both currencies hit
one-week lows. The Czech crown <EURCZK=>, seen as a safer haven
in the region, was a tad stronger.
Polish bonds were little changed in thin trade, while
Hungarian bonds dropped.
"Yields moved higher by 10-15 basis points due to the forint
and as the Greeks are being beaten," one Budapest-based trader
said. "This is a strange game ... The 10-year Greek yield is
already at 6.25 percent, their yields over four years are
already ... between Poland's and Hungary's."
POLAND'S PRIVATISATION DRIVE
Investors have been watching closely Poland's privatisation
plans, aimed at propping up revenues to keep its debt levels
below constitutional ceilings, a story that is expected to
remain one of the drivers of Polish markets this year.
Early on Thursday, fund managers told Reuters Poland has
launched a placement of at least 10 percent of the country's No.
2 refiner Lotos <LTOS.WA> worth 420 million zlotys.
[]
On Wednesday the CEO of Polish No. 3 utility Enea <ENAE.WA>
told Reuters the country's treasury may complete the sale of up
to 16 percent of the company. []
"Any positive news coming from Treasury that the ministry is
able to sell its stake in state-controlled companies is good,"
one dealer in Warsaw said. "As soon as the euro firms against
the dollar, the zloty should go up as well."
Investors were also eyeing December industrial output,
producer prices and net inflation data coming out of Poland at
1300 GMT.
In Czech Republic, shorter-dated interest rate swaps rose
after central banker Robert Holman's comments on a possible rate
hike already in the second or third quarter this year
[]. The crown mostly shrugged off the comments.
"Priced in in large extent in the market, still this was a
surprise as most houses predict a hike to come late Q3 or Q4
2010," Komercni Banka dealers said.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.984 26.024 +0.15% +1.29%
Polish zloty <EURPLN=> 4.076 4.052 -0.59% +0.69%
Hungarian forint <EURHUF=> 272.3 271.31 -0.36% -0.72%
Croatian kuna <EURHRK=> 7.291 7.292 +0.01% +0.25%
Romanian leu <EURRON=> 4.142 4.134 -0.19% +2.3%
Serbian dinar <EURRSD=> 97.2 97.41 +0.22% -1.36%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +18 basis points to 93bps over bmk*
7-yr T-bond CZ7YT=RR +4 basis points to +131bps over bmk*
10-yr T-bond CZ10YT=RR +3 basis points to +122bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +388bps over bmk*
5-yr T-bond PL5YT=RR +3 basis points to +326bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +284bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +14 basis points to +553bps over bmk*
5-yr T-bond HU5YT=RR +9 basis points to +508bps over bmk*
10-yr T-bond HU10YT=RR +13 basis points to +455bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1302 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates Eastern Europe spot FX <EEFX=>
Middle East spot FX <MEFX=> Asia spot FX <ASIAFX=>
Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, Writing by Marius Zaharia;
Editing by Toby Chopra and ...)
