* Fed bond buying programme sending cash to EM
* Zloty, forint likely to benefit most from QE2
* CEE rates may not rise as fast, Czech cbank meets later
By Jason Hovet
PRAGUE, Nov 4 (Reuters) - The Polish zloty hit a 2-1/2 week
high on Thursday to lead modest gains in emerging Europe after
the U.S. Federal Reserve moved to buy more government debt and
opened the way for more money flows into global markets.
The Fed committed to buy $600 billion in bonds in a second
round of so-called quantitative easing (QE2) to support a
struggling U.S. economy on Wednesday despite worries it could do
more harm than good. []
The Fed move is seen driving money flows more into emerging
markets as investors seek higher-yielding assets. Latin American
and Asian policymakers vowed on Thursday to use fresh measures
to curb capital inflows and protect their firming currencies.
[]
Emerging European policymakers are not expected to follow
their lead as currencies still have not fully recovered from the
economic crisis that started two years ago, but QE2 will limit
scope for central banks that are close to hiking interest rates,
such as Poland and to some extent the Czech Republic.
The zloty <EURPLN=> rose 0.4 percent to bid at 3.91 by 0801
GMT and the Hungarian forint <EURHUF=> added 0.2 percent. The
two currencies are likely to benefit the most by the hunt for
emerging market yields.
The Czech crown <EURCZK=> and the Romanian leu <EURRON=>
were flat.
"The criticism (about the budget outlook) from S&P may be
one reason why (the forint is) not firming as much," a
Budapest-based currency dealer said.
Standard & Poor's kept the country's outlook on negative on
Wednesday and warned of future budget risks. []
The zloty rose by around half a percent on Tuesday following
calls for a rate hike to cap inflationary pressures by some
Polish central bankers who had previously voted for stable
rates. Analysts have expected the bank to raise rates by the end
of the year. []
Bank BPH analysts said QE2 and the expected delay in
monetary tightening by the European Central Bank will add
pressure on the zloty and its central bank.
"If the scale of the appreciation will be excessive, this
could in turn harm the economic recovery. This is something that
the Monetary Policy Council (MPC) will have to take into
consideration," the bank wrote.
Polish policymakers left interest rates at a record low 3.5
percent last week, but did raise the reserve requirement rate.
Czech rate setters meet on Thursday, with analysts forecasting
no change in interest rates. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.475 24.475 0% +7.53%
Polish zloty <EURPLN=> 3.91 3.927 +0.43% +4.96%
Hungarian forint <EURHUF=> 271.72 272.21 +0.18% -0.5%
Croatian kuna <EURHRK=> 7.346 7.34 -0.08% -0.5%
Romanian leu <EURRON=> 4.293 4.294 +0.02% -1.3%
Serbian dinar <EURRSD=> 107.74 107.6 -0.13% -11.01%
All data taken from Reuters at 0902 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
For related news and prices, click on the codes in brackets: All
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Toby Chopra)
