* Zloty hits 5-month low, forint weakens to 4-month low vs
* Risks of S&P downgrade hurts Polish assets - dealer
* Growth recovery next year is seen helping currencies -
* Czech PMI lower, Polish higher than seen, Hungary still
* Short-term GDP outlook not upbeat, global uncertainties
(Recasts with zloty, forint fall, rise of bond yields, Reuters
poll on currency exchange rates)
By Sandor Peto
BUDAPEST, Dec 1 Poland's zloty and Hungary's
forint fell to their weakest levels for months on Thursday as
risk aversion gripped global markets and some investors
expressed concern that Standard & Poor's could downgrade Poland
at the end of the week.
Central European government bond yields surged, tracking
euro zone and U.S. peers as crude prices rose after producers
agreed to cut oil output.
That lifted expectations for a pick-up in inflation and
Federal Reserve interest rate hikes. Investors bought the dollar
instead of assets in emerging markets including Central Europe.
The forint and the zloty, the region's
most liquid currencies, eased 0.4 percent against the euro by
1451 GMT. The forint touched a 4-month low at 314.17 and the
zloty a 5-month low at 4.472.
In government bond markets, long-dated papers sold off and
the yield curves steepened, with the yield on 10-year bonds
rising 13 basis points to 3.77 percent in Warsaw and 11 basis
points to 3.49 percent in Budapest.
The Polish yield is above Hungary even though Poland's
credit ratings are better.
"The worry is that Poland will get downgraded tomorrow (in a
rating review by S&P)," one Budapest-based dealer said. "That
weakened the zloty, and indirectly the forint."
Initially, the currencies modestly firmed as manufacturing
indices indicated continuing economic growth after a slowdown in
the third quarter.
Poland's Purchasing Managers' Index was a
higher-than-expected 51.9 in November, while the Czech index at
52.2 was lower than expected but still indicated growth. The
50-point mark divides economic expansion from contraction.
Hungary's index, calculated with a different methodology,
dropped slightly from October but remained robust at 56.6.
"Looking from the GDP growth perspective, nothing really
changes for the better," said Adam Antoniak, senior economist at
Bank Pekao in Warsaw about the PMI figures.
"(Growth) in the last quarter of this year will likely be a
little lower than in the third one, around 2 percent
Tax cuts, rising government spending and a pick-up in
European Union aid inflows could help economic growth accelerate
in the region next year, helping currencies.
According to a Reuters poll of analysts, the zloty could
gain 3.7 percent by the end of November next year, from
By then the Czech central bank could remove its cap which
keeps the crown weaker than 27 against the euro,
according to the forecasts of 18 out of 21 analysts.
The median of those forecasts showed a 3 percent crown
firming by then to 26.27 versus the euro.
CEE MARKETS SNAPSHOT AT 1551 CET
Latest Previous Daily Change
bid close change in
Czech 27.0590 27.0575 -0.01% -0.23%
Hungary 314.0500 312.8350 -0.39% 0.19%
Polish 4.4710 4.4515 -0.44% -4.76%
Romanian 4.5080 4.5064 -0.04% 0.24%
Croatian 7.5470 7.5385 -0.11% 1.22%
Serbian 122.9500 123.0900 +0.11% -1.20%
Note: calculated previous close at 1800 CET
Latest Previous Daily Change
close change in
Prague 886.43 881.22 +0.59% -7.31%
Budapest 30086.88 30014.04 +0.24% +25.7
Warsaw 1792.47 1798.22 -0.32% -3.59%
Buchares 6833.93 6789.50 +0.65% -2.43%
Ljubljan 687.44 690.72 -0.47% -1.25%
Zagreb 1986.93 1997.81 -0.54% +17.6
Belgrade 701.30 694.63 +0.96% +8.88
Sofia 564.15 562.82 +0.24% +22.4
Yield Yield Spread Daily
(bid) change vs Bund change
2-year -0.752 0.024 -001bps +3bps
5-year -0.122 -0.018 +028bps -5bps
0.585 0.043 +026bps -1bps
2-year 1.961 0.064 +270bps +7bps
5-year 2.994 0.12 +340bps +9bps
3.781 0.131 +345bps +8bps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
Czech <PR 0.29 0.28 0.27 0
Hungary <BU 0.5 0.53 0.59 0.54
Poland <WI 1.765 1.79 1.82 1.73
Note: are for ask
(Additional reporting by Jason Hovet in Prague and Bartosz
Chmielewski in Warsaw; Editing by Catherine Evans/Hugh Lawson)