BUDAPEST, Sept 27 (Reuters) - East Europe's currencies held
onto last week's gains early on Monday, lifted by rising Asian
equities and the dollar's weakness, with the Hungarian forint
trading at 6-week highs ahead of a rate decision at 1200 GMT.
The Hungarian central bank is expected to keep its key base
rate on hold at 5.25 percent <NBHI> at its meeting on Monday.
Its comments will be closely watched to see if the bank
still considers hiking interest rates an option, after two of 7
rate setters voted for a rate hike at its August meeting, and
after the government pledged to cut the 2011 budget deficit.
"They will not hike, but the question is how worried a tone
they will strike in their comments," a Hungarian dealer said.
"It's the equity rally and the EURUSD which is now fuelling
this current (bullish trend in the region)," he added.
All the 27 participants in a Sept 22-23 Reuters poll
forecast that the central bank (NBH) will keep its base rate on
hold at 5.25 percent <HUREPO1>, waiting for more fiscal policy
details next month. []
"We see no reason for the central bank to alter monetary
conditions at this point, given that the MPC is in a
wait-and-see mode ahead of the release of 2011 budget details,"
CIB Bank said in a morning note.
At 0726 GMT, the forint <EURHUF=> was steady at 277.20 to
the euro from late Friday, while the Czech crown <EURCZK=> and
the Polish zloty <EURPLN=> were both up 0.1 percent against the
euro. The Romanian leu <EURRON=> was broadly steady.
The Budapest stock market <> was up one percent at 0738
GMT, Prague <> was up half a percent, while Warsaw <>
was steady.
Asian stocks rallied and the dollar dipped to five-month
lows versus the euro earlier on Monday on optimism about the
U.S. economy following last Friday's batch of data which were
mixed, but which included a rise in business spending which was
seen as a latest sign of firmer recovery.
"EME FX obviously like the EUR/USD action, with G7 equity
moves to also spill over nicely into the region today. All
boiling down to a gradual realization that there actually is a
global recovery story, supported by a gradual upside in the US,
a robust Germany, a continued strong China... and solid
individual EM domestic stories," Chevreux said in a note.
Romania's leu <EURRON=> was supported by positive news on
the release of a new IMF loan tranche from a 20 billion euro
international bailout.
The International Monetary Fund said on Friday its board
approved $1.19 billion in assistance for Romania and granted the
country's request for a waiver on certain performance targets.
[]
Dealers said the Czech crown would take cues from the
region. The currency has fallen into a range around 24.600 for
the past month and has not managed to break stronger than 24.500
despite a few attempts.
Some dealers said after these efforts, the currency could be
open to weakening, although it looked like staying stable this
week with a Tuesday market holiday.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.58 24.617 +0.15% +7.07%
Polish zloty <EURPLN=> 3.949 3.954 +0.13% +3.93%
Hungarian forint <EURHUF=> 277.2 277.19 0% -2.47%
Croatian kuna <EURHRK=> 7.291 7.291 0% +0.25%
Romanian leu <EURRON=> 4.244 4.241 -0.07% -0.16%
Serbian dinar <EURRSD=> 105.47 105.48 +0.01% -9.09%
All data taken from Reuters at 0926 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Krisztina Than; Editing by Toby Chopra)
