BUDAPEST, March 5 (Reuters) - Central European currencies
are expected to add to the past weeks' gains on the 6-12 month
horizon, led by the zloty and the crown, a monthly Reuters poll
of analysts showed on Friday.
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Following are analyst comments on trends.
ON REGION
RADOMIR JAC, GENERALI PPF ASSET MANAGEMENT, PRAGUE
"Compared to spot rates, I expect further slight gains in
the zloty in a month from now, while the Czech crown should be
roughly flat at 25.80 per euro.
"The forint may weaken a bit as the central bank will most
likely reduce its base rate again in March and the market will
then fully concentrate on the upcoming April election.
"The general view on the region remains positive. Assuming
that cases such as Greece are solved, central European
currencies should strengthen further in the second half."
ON CROWN
JAROMIR SINDEL, CITIGROUP, PRAGUE
"We have revised our weaker crown forecast to a more neutral
one in the short term. We believe the currency is close to the
trend and pressures are balanced.
"Although we remain negative on Czech bonds, we expect the
result of the Czech election to be supportive for fiscal
consolidation in either way -- a hike in taxes or a cut in
expenditures.
"We expect foreign demand for Czech bonds to calm somewhat
in the second half of the year after the ECB starts to withdraw
the extra liquidity support from the system, which could also be
negative for Czech crown."
"A hike in the policy rate (due to a gradual economic
recovery and higher inflation) could lead to the currency
resuming its gradual appreciation trend."
PETER POPLAWSKI, BGZ, WARSAW
"The crown is the least likely to be affected by the turmoil
related to financial problems of some EU members. However, due
to low interest rates and a fragile domestic economy, the
potential for gains may prove limited. Investors will eye
central bank hints on monetary tightening."
JIRI SKOP, KOMERCNI BANKA, PRAGUE
"The balanced external position and our bullish house view
on emerging markets are the main reasons for our optimistic
expectations on the Czech currency.
"Because of several risks connected with unfavourable fiscal
developments, the upcoming general election and relatively low
domestic interest rates, we prefer to use the crown as a funding
currency in relative trades.
"The crown should underperform other regional currencies due
to its low-yielding status."
ON ZLOTY
JANINA SWIATKOWSKA, PKO BP
"We expect medium-term zloty appreciation as: 1) despite
recent gains, the zloty is still undervalued given its strong
macroeconomic fundamentals; 2) an expected improvement in
foreign capital inflows into emerging Europe; and 3) potential
for the privatisation process to gather momentum in 2010."
PETER POPLAWSKI, BGZ, WARSAW
"Investors have already learned key news regarding the
public deficit for 2010, leaving a broader correction in
financial markets a key threat for the zloty over next months.
The currency may prove fragile to potential fiscal problems of
Spain or Portugal."
BANK ZACHODNI WBK, WARSAW
"In the short term we expect some correction in the zloty,
which may push the exchange rate toward 3.97-4.00. However,
throughout the year, we expect gradual zloty strengthening. In
our view the EURPLN rate at the year-end may be below 3.80."
ON FORINT
PETER POPLAWSKI, BGZ BANK, WARSAW
"The forint may prove particularly fragile to turmoil
related to the financial standing of some euro zone members
(especially in case of problems in Spain or Portugal), which may
materialise this year.
"In the longer run, the interest rate disparity (relative to
other CEE countries) and the inflow of capital should help
support the currency."
GYORGY BARTA/SANDOR JOBBAGY, CIB, BUDAPEST
"We expect the forint to remain mostly in the 270s range
ahead of the parliamentary elections this spring and before the
exact fiscal policies of the next government become clear.
"If market conditions remain supportive and fiscal
discipline is maintained (not counting one-off quasi-fiscal
consolidation costs), the forint could begin to firm again in
the second half of the year."
BALINT HADA, QUAESTOR, BUDAPEST
"We expect that investors remain bullish on HUF in the short
term, but we remain a bit pessimistic on a one-year horizon."
(Reporting by Sandor Peto/Gergely Szakacs; Editing by Ruth
Pitchford)
