* Markets likely in wait-and-see mode until Polish rate move
* Chances for a rate hike in Hungary lower after wage data
By Marius Zaharia
BUCHAREST, Jan 18 (Reuters) - Central European currencies
were slightly firmer on Tuesday, with investors eyeing a two-day
rate-setting meeting in Poland expected to deliver its first
rises in borrowing costs.
The Polish zloty weakened briefly in early trade on comments
by Governor Marek Belka published on Tuesday, but made on Dec.
28, that interest rate hikes were only needed if price growth
proved long-lasting [].
That was a week before an interview with Reuters in which
Belka announced the time had come for Poland to start tightening
monetary policy, but the headlines still unnerved markets now
betting firmly on a rise in rates. []
"Have you seen how fast (EURPLN) moved 100 pips higher on
that? It will be a regional slaughter if they don't hike," one
dealer in Bucharest said.
A Reuters poll showed 19 of 29 analysts expect the Polish
central bank to raise its key interest rate by 25 basis points
on Wednesday, from a record low 3.5 percent. []
Money market forward rates <PLNFRA> price in at least a 25 basis
point rise.
Expectations of monetary tightening have boosted currencies
across central Europe, with Hungary already having moved late
last year and the Czech Republic and Romania expected to follow
later this year.
At 0844 GMT, the zloty <EURPLN=> and Romania's leu were up
0.1 percent on the day, while the Czech crown <EURCZK=> and the
Hungarian forint <EURHUF=> gained 0.2-0.4 percent.
Hungarian data showed on Tuesday that gross average wages
dropped by 1.2 percent on the year in November, possibly
decreasing the chances for another rate rise next Monday, after
50 basis points of increases to 5.75 percent.
"Taking the stabilisation of the forint and this wage data
into account, the chances of another rate rise have declined,"
said Zoltan Torok of Raiffeisen.
Rate-setter Judit Nemenyi, who backed the bank's rate rises
in November and December, told Reuters on Monday she was
inclined towards further tightening but November wage data would
weigh on her decision at the Jan. 24 meeting. []
Analysts remained bullish on the Czech Republic, where Prime
Minister Petr Necas said it backed a proposal to merge the
country's two value-added tax rates at 19 percent -- raising the
overall take -- to finance a pension reform. []
The government plans to divert a portion of contributions to
the state pay-as-you-go system to private pension funds, the
opposite of what Hungary did last year, when it sparked fears of
lower demand for state debt.
One dealer in Prague said the next technical level was
around 23.700 per euro from Tuesday's 24.23, so the room was
open for further firming but at the same time there may be a
correction after recent gains in the short-term.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.23 24.274 +0.18% +3.18%
Polish zloty <EURPLN=> 3.864 3.868 +0.1% +2.43%
Hungarian forint <EURHUF=> 272.94 274.16 +0.45% +1.85%
Croatian kuna <EURHRK=> 7.386 7.394 +0.11% -0.08%
Romanian leu <EURRON=> 4.253 4.257 +0.09% -0.47%
Serbian dinar <EURRSD=> 104.11 104.41 +0.29% +1.75%
All data taken from Reuters at 1044 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, Writing by Marius Zaharia;
Editing by Patrick Graham)
