Emerging European currencies gave up early gains on Friday as disappointing US payroll data encouraged risk aversion in global markets, while worries about a Czech coalition row and Hungary's international aid talks weighed on sentiment. Czech and Hungarian industrial output figures beat forecasts and lifted the countries' currencies in early trade, but the gloomy US economic data reversed the rise.
The forint had eased 0.1 percent against the euro by 1359 GMT to 295.95 and the Czech crown shed 0.2 percent to 24.68, while the Polish zloty was flat at 4.157 and the Romanian leu firmed 0.1 percent to 4.368. Dealers said the currencies' retreat was mainly caused by the US data which raised concern about the outlook for the global economy and cut investors' appetite for riskier assets.
A local report that Hungary is not expected to start credit talks with the International Monetary Fund this month could weigh on the forint when markets reopen on Tuesday after the Easter holiday, dealers said. Investors remain split on whether Budapest can secure a financial backstop. A dispute with the European Commission over some Hungarian laws has blocked the talks, and Brussels also wants the government to cut the budget deficit.
"Uncertainty is huge... some people buy, others sell on the same news," one fixed income trader said. "It's a question of what we will see in the (government's) convergence programme (to be published next week," the trader added. The region's currencies ended the week mixed, near last week's closing levels. They have changed little in the past few weeks after gains early this year as the European Central Bank pumped liquidity into euro zone markets.
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