* Polish cbanker says zloty may be undervalued
* Forint rebounds after 1 pct drop in previous session
* Euro zone periphery debt stays in investors' sights
PRAGUE, Jan 11 (Reuters) - The zloty rose half a percent on
Tuesday on growing expectations that Poland is set to start
raising interest rates, leading central European gains as
currencies rebounded slightly.
The region's currencies recovered from Monday, when concerns
that the euro zone debt crisis could engulf Portugal sent
investors away from risk.
The euro, central Europe's main reference currency, hovered
near a four-month low, but analysts said expectations of higher
interest rates in emerging Europe helped the region recover.
Polish Monetary Policy Council (MPC) member Andrzej Rzonca
said the zloty is more likely undervalued than overvalued in an
article in daily Rzeczpospolita on Tuesday, adding to a run of
hawkish comments from his colleagues this year. []
"This gives rise to speculation that there will be a rate
hike as soon as this month," said Thu Lan Nguyen, a Commerzbank
FX analyst. "This is supporting the zloty at the moment."
The zloty <EURPLN=> added 0.5 percent to rise to the strong
side of the 3.90 per euro level that has provided support in the
past. It was bid at 3.885 to the euro, while Hungary's forint
<EURHUF=> added 0.4 percent to 278.75 per euro by 0858 GMT,
after dropping 1 percent the previous day.
The region's stock markets edged up on the day, with shares
in Bucharest <> leading the gains with a 1.1 percent rise.
Central European stocks fell on Monday in line with other
European markets on risk aversion fuelled by concerns over the
euro zone's debt problems.
The zloty started 2011 on a strong note last week when
Governor Marek Belka told Reuters it looked like time to start a
gradual monetary tightening cycle.
Another central banker said over the weekend that recent
inflation forecasts necessitated higher rates. The central bank
holds its next rate meeting next week. []
Hungary has already hiked interest rates by a half
percentage point in two moves at the end of 2010. Analysts
expect Poland will be next, while the Czech Republic will not
begin tightening policy until mid-2011.
Czech retail sales data on Tuesday did little to change this
view despite an above-forecast rise, which mainly came from
year-end car sales. []
The Czech crown <EURCZK=> rose 0.4 percent to 24.511, near
24.500 level that provided resistance last year when the
currency was approaching highs last seen in 2008. Romania's leu
<EURRON=> inched up 0.1 percent.
Dealers said markets remained shaky with investors focused
on debt auctions in the euro zone periphery that will be the
first big test in the new year for the euro zone's battle with
debt.
"Today the focus should be on the peripheral bond spreads
... flat for the moment. But if they widen it is possible that
some risk is taken off the table," said one dealer in Bucharest.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.511 24.616 +0.43% +2%
Polish zloty <EURPLN=> 3.885 3.905 +0.51% +1.88%
Hungarian forint <EURHUF=> 278.75 279.75 +0.36% -0.28%
Croatian kuna <EURHRK=> 7.4 7.4 0% -0.27%
Romanian leu <EURRON=> 4.258 4.261 +0.07% -0.59%
Serbian dinar <EURRSD=> 105.87 105.88 +0.01% +0.05%
All data taken from Reuters at 0957 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet)
