* Zloty, forint pull back from peaks
* Leu steady as inflation points to rate cuts
* Dealers see room for further FX gains
By Jason Hovet
PRAGUE, March 10 (Reuters) - The Hungarian forint and Polish
zloty retreated from multi-month peaks on Wednesday, while
Romania's leu held steady after inflation data pointed to
further interest rate cuts.
Central Europe's currencies have rallied in the past month
and dealers said the region's improving economic outlook has
opened room for more short-term gains.
Annual inflation in Romania, where interest rate cuts remain
on the agenda, fell below market expectations to 4.5 percent in
February, data showed on Wednesday. []
The central bank has cut 325 basis points off the main rate
in the past 12 months, and analysts said prospects of falling
inflation pointed to further reductions.
Commerzbank said it expected a 50 basis point cut at the
central bank's meeting later this month.
"The leu is unlikely to be affected by this as the improved
political situation and the resulting IMF aid are still
dominating," it said in a daily note.
The leu <EURRON=> bid down a touch at 4.096 to the euro by
0854 GMT.
The International Monetary Fund freed up in February $3.32
billion from Romania's revived 20 billion euro aid package after
a new government passed a 2010 austerity budget.
On Tuesday, Standard & Poor's changed its outlook on Romania
to stable from negative, citing the government's success so far
in undertaking fiscal consolidation. []
Dealers said the move was mostly priced in the market after
a similar change from Fitch agency last month.
In Hungary, where analysts said there was room to ease
monetary policy, markets where looking to a Thursday release of
February inflation data after an upside surprise in January.
"With the EUR/HUF below 270, everyone is trying to guess
whether the central bank would cut one more time, or maybe
more," a dealer said. "But with two consecutive high inflation
numbers, the NBH would probably strike a less bullish tone."
The forint <EURHUF=> dipped 0.3 percent to 267.29 to the
euro, but traded near its highest since November. The Czech
crown <EURCZK=> inched 0.2 percent up around four-month highs.
The zloty <EURPLN=>, hit by profit-taking, pulled back
slightly from a 15-month peak to bid at 3.871 per euro.
The unit is expected to lead central European currencies
this year on the back of its economic recovery and expectations
of rate hikes this year.
However, the zloty's 6 percent rise so far this year has
prompted some concern from policymakers that it could stunt
recovery, with rate setter Andrzej Bratkowski saying on Tuesday
that rates would most probably stay unchanged this year.
[]
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.579 25.632 +0.21% +2.89%
Polish zloty <EURPLN=> 3.871 3.867 -0.1% +6.02%
Hungarian forint <EURHUF=> 267.29 266.53 -0.28% +1.14%
Croatian kuna <EURHRK=> 7.262 7.262 0% +0.65%
Romanian leu <EURRON=> 4.096 4.094 -0.05% +3.45%
Serbian dinar <EURRSD=> 99.74 99.657 -0.08% -3.87%
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, editing
by Stephen Nisbet)
