By Sandor Peto
BUDAPEST, April 9 (Reuters) - The Hungarian forint is set to
give up some ground in the next few months after national
elections on Sunday but is poised for a modest gain of less than
1 percent over a 12-month horizon, a monthly Reuters poll of
analysts showed on Friday.
The April 6-8 poll of 44 analysts was conducted before
Bulgaria dropped its plans to apply to join the pre-euro ERM-2
waiting room because of a larger than expected 2009 budget
deficit, triggering a fall in Central European currencies.
Analysts said the Bulgarian events, the Greek debt crisis
and the Polish central bank's intervention on Friday to weaken
the zloty would weigh on the region in the short term, but the
currencies' longer-term prospects remained positive.
"The region is well placed to outperform this year, given
reforms were already started a year ago and debt/GDP ratios are
generally much lower (especially in the Czech Republic, Poland,
Russia and Turkey)," said Simon Quijano-Evans at brokerage
Cheuvreux.
According to the poll, Central European currencies are
expected to retreat slightly over the next few months after
posting strong gains this year amid hopes for economic recovery.
But the consensus forecasts for the region's four main
currencies show slightly stronger levels against the euro in the
next 12 months than a poll a month ago.
The Polish zloty and the Romanian leu are poised to gain 3
percent over the next 12 months from levels at 1007 GMT on
Friday. The Czech crown will gain about 1 percent, according to
the poll.
The consensus forecasts changed to 3.72 from 3.75 for the
zloty <EURPLN=>, to 4.0 from 4.05 for the leu <EURRON=>, to
24.85 from 25 for the crown <EURCZK=> and to 265.00 from 265.30
for the forint <EURHUF=>.
The poll also reflects expectations that the laggards -- the
leu and the forint -- may start to catch up in the next year.
The zloty has led the region, gaining 6.5 percent this year and
prompting the central bank to intervene in the market on Friday
to curb its strength. []
The economic crisis has been deeper in Romania and Hungary
than elsewhere in the region and both countries had to resort to
aid from the International Monetary Fund.
The region's currencies, stocks and bonds have been rising
this year. Analysts said the markets have room for further gains
despite the Greek crisis which weighs on short-term prospects.
In a separate Reuters poll, analysts slightly downgraded
their forecasts again for the euro, emerging Europe's reference
currency, due to the debt crisis in euro zone member Greece.
[]
FORINT SEEN UNSCATHED BY ELECTION
An additional potential negative factor for the forint is a
plan by Hungarian opposition party Fidesz -- which is expected
to win the election -- to lift the budget deficit target.
But the forint is still seen trading relatively stable at
around 270 to the euro in the next six months as the new
government is expected to receive a strong mandate to lead the
economy out of recession and carry out reforms.
According to a Goldman Sachs note dated April 7, recent
economic figures suggest that recovery may become increasingly
more broad-based in many emerging markets, which means laggards
including Hungary may well play some catch-up.
"Stronger growth and lower risk premium should increase
demand for the forint, currently reduced because of the strong
deleveraging in the private balance sheets, with Hungarians
repaying their forex denominated loans," said Goldman's
Magdalena Polan in a separate note on Hungary's elections.
The Hungarian and Romanian central banks are expected to cut
their interest rates further this year, but their debt yields,
well above Czech levels, are still attractive. []
The poll consensus sees the leu firming to 4.09 per euro by
the end of April from Friday's levels around 4.13. It is seen at
4.05 in three months, 4.03 in six months and 4.00 in 12 months.
"I'm optimistic on the leu given better politics, an
agreement over fiscal targets and the return of IMF cash," said
Nigel Rendell of RBC Capital Markets.
"Interest rates are being cut but are still attractive," he
added. "The leu was one of the worst performing EM (emerging
market) currencies last year but now has the scope to 'catch up'
given the better policy and macro outlook."
For data please click on <CEEFXPOLL01>
Take a look on Hungary's elections []
Latest poll on major currencies <FOREXPOLL01>
For more analyst comments on CEE currencies please click on
[]
(Reporting by Sandor Peto; Editing by Susan Fenton)
