BUDAPEST, Jan 29 (Reuters) - The Polish zloty led gains in
central European currencies in early trade on Friday as markets
awaited Warsaw's long-awaited plans to tackle its ballooning
budget deficit.
Dealers said Polish GDP data on Thursday, which
underlined the economy's resilience, gave the zloty <EURPLN=> a
boost and the currency was up 0.4 percent against the euro
<EUR=> by 0805 GMT. Gains could be shortlived though given a
flight out of the euro <EUR=> to the dollar amid fresh concern
about Greece's abilty to solve its fiscal problems, they said.
Hungary's upgrade on Thursday of its GDP forecast for this
year meanwhile underpinned the Hungarian forint <EURHUF=>, which
was 0.2 percent higher.
Poland, the only European Union member to avoid recession
last year, saw GDP expand 1.7 percent in 2009, data showed on
Thursday, just above forecasts and raising optimism about
economic performance this year.
On Friday, the government is due to outline plans to
consolidate its finances, which are expected to include how it
expects to reduce its budget deficit --which stood at 6.3
percent of GDP last year -- to 3 percent of GDP, the level
required for joining the euro zone.
"Better GDP data and the continuing positive momentum in the
Polish economy should be underpinning both the zloty and -- due
to the positive fiscal implications - a further fall in the risk
premium on Polish bonds," BRE Bank analysts wrote in a morning
note to clients.
Analysts said gains in Central European currencies could be
shortlived given renewed concern about Greece's financial
situation in the past few days, forcing Greece and key EU states
to deny a media report that Greece would receive a bail-out
package from EU members. []. Expectations for
encouraging U.S. GDP data later on Friday were also supporting
the dollar.
"Downside pressure on EUR/USD will unlikely to ease ahead of
the US GDP release and ongoing tensions in the Greek bond market
amid denials of a West European bail-out package. This alongside
a shaky US/Asian equity market backdrop should create an uneasy
start for CEE markets," UniCredit said in a note.
Hungary's finance ministry said on Thursday the economy
would contract by 0.3 percent this year, up from a previous
forecast for a 0.6 percent contraction, but the country would
still lag recovery of its central European peers.
[]
Data released on Friday showed unemployment stayed at 10.5
percent in the fourth quarter of last year and markets expect it
to reach 11 percent before the economy picks up in the second
half. []
The Czech crown <EURCZK=> steadied from losses in the
previous session when investors were selling it to buy regional
peers like the Romanian leu <EURRON> and the zloty, dealers
said.
The crown was broadly unchanged in early trade after data
showed Czech industrial output rose 2.1 percent year-on-year in
December, the first annual increase since Sept. 2008, exceeding
market expectations. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 26,221 26,219 -0,01% +0,37%
Polish zloty <EURPLN=> 4,058 4,077 +0,47% +1,13%
Hungarian forint <EURHUF=> 271,58 272,23 +0,24% -0,45%
Croatian kuna <EURHRK=> 7,308 7,309 +0,01% +0,02%
Romanian leu <EURRON=> 4,127 4,134 +0,17% +2,68%
Serbian dinar <EURRSD=> 98,55 98,43 -0,12% -2,71%
*Benchmark is German bond equivalent.
All data taken from Reuters at 0914 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
(Reporting by Reuters bureaux, Writing by Gergely Szakacs;
Editing by Susan Fenton)
