(Corrects day of Hungary budget data release in paragraph 10 to
to Thursday)
PRAGUE, April 5 (Reuters) - The zloty inched higher ahead of
a central bank meeting that is expected to raise interest rates
on Tuesday, though dealers said markets have mostly priced a
second move this year by the bank.
Other emerging European currencies were mixed as the
region's reference currency the euro pulled back from a
five-month high and stock markets dipped in early trade.
Twenty-three of 29 analysts in a Reuters poll last week
expected the bank to raise borrowing costs by a quarter
percentage point amid concerns over accelerating inflation.
[]
The zloty <EURPLN=> added 0.2 percent on Tuesday after a dip
in the previous session. Hungary's forint <EURHUF=> inched 0.1
percent down and Romania's leu <EURRON=> added 0.3 percent.
"We keep expecting the balance in the (Monetary Policy
Council) MPC to favour hawks and look for a 25 basis point hike
to 4.0 percent, especially now that the zloty has underperformed
in recent weeks," SEB said in a trade note.
"A hike should not, however, create much market movements as
it is largely expected."
The zloty has bounced around in the past month with
expectations of higher rates, but is also weighed down by worry
over a possible revision to current account data and snags in
the state's $5 billion privatisation plan. []
The forint is near an 11-month high and has been a top
performer with a 3-percent gain in the past three weeks, more
than double the pace of the leu, as the economic outlook
improves for both countries.
The currency strength in Hungary has given a lift to debt
markets, with the 5-year bond yield at a two-month low.
Attention will turn to Hungarian budget data due on
Thursday. The budget showed a deficit of 81.4 percent of the
full-year target by February and analysts expect the deficit to
deteriorate further in the first quarter. []
"At the same time the market knows that extraordinary
revenues (pension fund assets, crisis taxes) will later reverse
the current ugly budget situation," CIB Bank said.
Markets will also watch an expected euro zone interest rate
rise this week but analysts do not expect this to cause a
knee-jerk reaction from central European policymakers.
[]
Most analysts believe that Hungary's central bank has
already finished its 75 basis point tightening cycle.
The Czechs have yet to start tightening and markets are not
pricing a change in until the middle of the year, while Romania
left rates flat last week and is not expected to move any time
soon.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.439 24.417 -0.09% +2.3%
Polish zloty <EURPLN=> 4.019 4.025 +0.15% -1.52%
Hungarian forint <EURHUF=> 265.31 265.01 -0.11% +4.78%
Croatian kuna <EURHRK=> 7.37 7.369 -0.01% +0.14%
Romanian leu <EURRON=> 4.111 4.124 +0.32% +2.97%
Serbian dinar <EURRSD=> 102.4 102.31 -0.09% +3.44%
All data taken from Reuters at 0940 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; editing
by Patrick Graham)
