* Euro having less impact on CEE FX in pre-holiday trade
* Hungary warns cash-flow budget deficit to surge
* Mkts await Poland, Hungary rate decisions next week
WARSAW, Dec 16 (Reuters) - Central Europe's currencies
opened mostly flat on Thursday due to uncertainty about interest
rate decisions next week in Poland and Hungary and as investors
are becoming reluctant to open new positions ahead of the year
end.
The euro -- the region's main reference currency -- usually
sets trends for the CEE currencies, but the correlation seems to
have been breached in recent days, dealers said.
"Clearly we have entered the pre-Christmas lull, trade is
thin and even moves on the euro are not affecting the region,"
said one Warsaw-based dealer.
Caution ahead of the holiday season meant even the Hungarian
forint was relatively stable despite continued concern about
government policies to tackle debt.
"Looking at Hungary, we should see a selloff of its
currency, given the political situation there, but this is not
happening."
On Wednesday Hungary's independent Budget Council said the
country's cash-flow budget deficit could rise to 4.1 percent of
gross domestic product by 2012 and to 5.5 percent by 2013 after
the impact of one-off taxes and pension measures fades.
[]
Hungary's government has ended the transfer of employee
contributions to the mandatory private pension system, reversing
a key 1997 pension reform, and has levied heavy taxes on banks
and certain key sectors of the economy.
Analysts worry that the country could erode the pension
assets without structural reforms and face difficult financing
problems in the medium term. []
The forint <EURHUF=> lost some 3 percent of its value
against the euro after the plan was announced, but it has clawed
back half of its losses since then and traded at around 274.5 to
the euro by 0805 GMT on Thursday.
Other currencies hovered around their previous closing
levels, with the Polish zloty <EURCZK=> virtually flat to the
euro and the Czech crown <EURCZK=> and Romanian leu <EURRON=>
each edging down 0.1 percent.
In Poland, the statistics office releases wages and
corporate employment data at 1300 GMT, with analysts expecting
readings to stand at 4.4 percent and 2.2 percent respectively.
However, dealers do not expect the data to have an impact on
the zloty as wage pressure remains weak and is not seen as a key
factor now for the central bank's Monetary Policy Council (MPC)
as it weighs up whether to raise interest rates next week.
A member of the MPC, Andrzej Bratkowski, told TVN CNBC late
on Wednesday there was the possibility of an early start in the
monetary tightening cycle, although he said a decision should
not be prejudged. []
The Polish central bank has kept rates steady at a record
low of 3.5 percent for the past 17 months and is expected to
start raising borrowing costs in early 2011.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.153 25.13 -0.09% +4.63%
Polish zloty <EURPLN=> 3.981 3.981 0% +3.09%
Hungarian forint <EURHUF=> 274.51 275.23 +0.26% -1.52%
Croatian kuna <EURHRK=> 7.39 7.39 0% -1.09%
Romanian leu <EURRON=> 4.292 4.29 -0.05% -1.27%
Serbian dinar <EURRSD=> 104.61 105.36 +0.72% -8.35%
All data taken from Reuters at 0905 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Dagmara Leszkowicz;
Editing by Susan Fenton)
