* Zloty lower as some see slower monetary tightening
* Forint steady through Hungary PM speech
* GDP, CPI data closely watched this week
(Updates after Hungary PM speech)
By Marton Dunai and Jason Hovet
BUDAPEST/PRAGUE, Feb 14 (Reuters) - Central European
currencies were mostly lower on Monday as Hungary's prime
minister disappointed markets by pushing back a rollout date for
key fiscal reforms, and Polish rate hike expectations looked
overplayed.
The forint was down by 0.4 percent but little changed after
Viktor Orban told parliament his government would present a
three-year budget deficit-cutting programme by March 15,
unveiling few detail of the package. []
Investors had expected an announcement by the end of
February or early next month.
The currency had rallied this year on expectations the plan
would put the budget on a sustainable path following short-term
measures for this year and next.
By 1335 GMT, the zloty <EURPLN=> had shed 0.5 percent. Both
it and the forint <EURHUF=> also tracked weakening in the
region's reference currency, the euro, versus the dollar.
The Czech crown <EURCZK=> inched down 0.1 percent, while the
Romanian leu <EURRON=> gained 0.2 percent.
Analysts expect multiple rate hikes in Poland this year but
some have concluded those expectations are overdone.
"We continue to believe that too much monetary tightening is
now discounted and see this as the key risk for PLN, given its
high sensitivity to short term interest rates," RBC said.
Polish Monetary Policy Council member Elzbieta Chojna-Duch
said on Monday that policy tightening at the next meeting in
March was not "absolutely necessary". []
Inflation and growth are seen as key for the likely rate
path in Poland. A Reuters poll had Poland's January inflation
accelerating to a one-year high of 3.4 percent. []
FORINT WAITING ON CHANGE
The forint was seen as sensitive to political and fiscal
news, especially about the government's reform package and its
planned changes to rules for nominating central bank
rate-setters, the majority of whom will be replaced in March.
Hungary's ruling Fidesz party has said the impending changes
to the central bank's Monetary Council, and new rules that could
let Fidesz pack the council with its candidates, will not lead
to a sudden policy reversal.
Markets are watching nervously for signs that the changes
might lead to softer policy. [] []
Orban's speech to parliament caused little reaction in the
forint, which is up 2 percent this year.
Analysts have been closely anticipating a 600-700 billion
forint deficit reduction package for signs that Orban will
return Hungary to budget sustainability after a string of
one-off measures meant to boost growth and raise state revenues.
"The only new thing we heard in the speech was a new date
(March 15)," one Budapest-based currency dealer said. "I don't
know how many people had expected news ... Slight forint
weakening is possible now; the next technical level is 273.50."
This week will also bring a heavy schedule of data releases
in the region. Poland and Hungary release January inflation
figures on Tuesday, and Hungary, the Czech Republic and Romania
give fourth-quarter GDP estimates.
Romania kicked off the series of releases on Monday, showing
annual inflation of 7 percent for January, down from 8 percent
in December. Analysts said the data should have no immediate
impact on interest rates or short-term exchange rates.
[]
Inflation in Romania is widely expected to fall sharply this
year and analysts see the central bank cutting rates further
from a record low 6.25 percent, although pressures from surging
global food prices could limit room for rate cuts.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.238 24.21 -0.12% +3.14%
Polish zloty <EURPLN=> 3.938 3.917 -0.53% +0.51%
Hungarian forint <EURHUF=> 272.2 271.2 -0.37% +2.12%
Croatian kuna <EURHRK=> 7.41 7.409 -0.01% -0.4%
Romanian leu <EURRON=> 4.246 4.254 +0.19% -0.31%
Serbian dinar <EURRSD=> 103.17 103.38 +0.2% +2.67%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +8 basis points to 33bps over bmk*
7-yr T-bond CZ7YT=RR +17 basis points to +76bps over bmk*
10-yr T-bond CZ9YT=RR +4 basis points to +76bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1436 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaux, writing by Marton Dunai/Jason
Hovet; Editing by Catherine Evans, John Stonestreet)
