PRAGUE, Jan 26 (Reuters) - A stronger euro supported central
European currencies on Wednesday, with the Czech crown leading
gains after hawkish comments from policymakers.
Czech central bank board member Eva Zamrazilova was quoted
as saying late on Tuesday that a neutral interest rate would be
1 percent to 1.5 percent under current conditions, higher than
the base rate of 0.75 percent that has been in place since May.
While Hungary and Poland have started tightening policy,
analysts do not expect a Czech rate hike until the middle of the
year and markets are pricing in a rate hike within six months.
[]
Zamrazilova is the central bank board's most hawkish member
and was alone in voting for a rate rise at the bank's last three
meetings, but her latest comments add to hawkish comments in
recent weeks from other policymakers.
Bank Governor Miroslav Singer said this week the economy was
showing stronger-than-expected inflationary pressures, adding
later that the crown was close to its long-term trend despite
its appreciation this month. []
The crown has led the region with a 3.4 percent gain in
January. The unit <EURCZK=> rose 0.25 percent to bid at 24.14 to
the euro on Wednesday, near a November 2008 high.
"Following this correction (at the end of 2010), the crown
is now continuing its moderate appreciation -- assuming that
risk appetite among investors does not fall again," Commerzbank
said.
Regional currencies were given a boost by the euro, the
reference currency in central Europe, which hit a two-month high
against the dollar. Markets were awaiting statements later from
the U.S. Federal Reserve, which were expected to be dovish,
potentially lending the euro further support against the dollar.
Stocks also added support, with shares in Budapest up 1.2
percent <>.
The Hungarian forint <EURHUF=> added 0.15 percent while the
Polish zloty <EURPLN=> dipped 0.1 percent. The Romanian leu
<EURRON=> was steady.
The Hungarian government on Tuesday criticised the central
bank's latest rate hike, on Monday, as unwarranted. This was
seen as another warning the government would try to force the
bank onto a more dovish policy once new bank members, appointed
by a government-controlled parliamentary committee, take their
seats in March.
"The government once again criticised the central bank for
the rate hike," Cashline analyst Kornel Sarkadi Szabo wrote in a
note. "This is a new signal to markets: from March, the
new-composition council is highly unlikely to raise rates
further. Moreover, a new option has arisen: a rate cut."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.14 24.2 +0.25% +3.56%
Polish zloty <EURPLN=> 3.875 3.871 -0.1% +2.14%
Hungarian forint <EURHUF=> 274.72 275.14 +0.15% +1.19%
Croatian kuna <EURHRK=> 7.411 7.406 -0.07% -0.42%
Romanian leu <EURRON=> 4.258 4.258 0% -0.59%
Serbian dinar <EURRSD=> 104.34 104.24 -0.1% +1.52%
All data taken from Reuters at 0955 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Susan Fenton)
