BUDAPEST, Oct 19 (Reuters) - Eastern Europe's currencies
were little changed early on Monday, with the Polish zloty a
touch higher ahead of output data later in the day and markets
eyeing an expected further cut in Hungary's interest rates.
The region's currencies have gained steadily since March on
a global risk rally that has driven huge gains for stock markets
and emerging markets as faith grew that the economy would
recover from last year's financial crisis.
But analysts say there are risks to eastern Europe's own
recovery from the need to rein in budgets and political
uncertainty, most recently in Romania.
"The market is a wait and see mode and this is what we can
expect until 1200 GMT, the (Hungarian) rate decision," a
Budapest-based dealer said.
Hungary's central bank is expected to cut its key interest
rate to 7 percent from the current 7.5 percent <NBHI>, after
reducing rates by a total of 200 basis points in the past three
months, a Reuters survey showed on Friday. []
Interest rates in one of Europe's worst-hit economies are
seen bottoming out lower next year than previously thought and
inflation is undershooting previous estimates as a deep economic
recession curbs domestic demand.
Elsewhere, the Polish statistics office releases industrial
output and producer prices data for September later on Monday.
Industrial output is expected to shrink by 2.2 percent,
while producer prices are seen growing by 2.2 percent, according
to a Reuters poll.
"Today's release of domestic industrial output and PPI data
should not have a bigger impact on the zloty. The global
sentiment will be key ... We expect the zloty to stay in the
range of 4.18/4.22 against the euro," Bank BPH wrote in a
morning note to clients.
At 0705 GMT the Hungarian forint <EURHUF=> was broadly
steady at around 266.9 versus the euro, as was the Czech crown
<EURCZK=>, and the Polish zloty <EURPLN=> was up 0.26 percent.
The Romanian leu <EURRON=> was stuck in recent ranges, just
off a seven-month low hit last week after the government
collapsed.
Prime Minister designate Lucian Croitoru is expected to meet
political parties later in the day in a bid to garner support to
form a new government. Observers say he is facing an uphill
battle after opposition parties reiterated over the weekend
their support for another candidate.
Dealers said while political wrangling is hurting market
sentiment, players fear a central bank intervention close to 4.3
per euro, a level they say it has defended in the past weeks.
The central bank has declined to comment.
"Volumes in the market are lower with every day that
passes," one dealer said. "We are basically stuck at these
levels and I see no special interest in going either way."
"I don't think that it will be a surprise for the market if
Croitoru fails to form a government, but it will be a positive
if he miraculously succeeds," the dealer added.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.826 25.837 +0.04% +3.59%
Polish zloty <EURPLN=> 4.2 4.211 +0.26% -2.02%
Hungarian forint <EURHUF=> 266.83 266.96 +0.05% -1.23%
Croatian kuna <EURHRK=> 7.23 7.24 +0.14% +1.87%
Romanian leu <EURRON=> 4.287 4.286 -0.02% -6.36%
Serbian dinar <EURRSD=> 92.98 93.05 +0.08% -3.76%
All data taken from Reuters at 0905 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
(Reporting by Krisztina Than)
