* Czech central bank expected to keep rates at record low
* Forint extends gains as rate cut prospects recede
BUCHAREST, March 24 (Reuters) - The Czech crown edged higher
in early trade on Thursday before a policy meeting at which the
central bank is expected to leave rates at record lows, while
Hungary's forint climbed for the sixth successive session.
Poland and Hungary have already reversed rate-easing cycles
in past months, and analysts expect the Czech central bank to
follow suit and raise rates later this year. []
Nineteen of 20 analysts in a Reuters poll expected the bank
to keep the key two-week repo rate at 0.75 percent <CZCBIR=ECI>.
One analyst expected a quarter-point hike, a move which could
trigger a rise in the crown.
"The hawks in the CNB board see inflation risk from
second-round effects from commodity prices and a possible
pick-up of wage growth in 2012," said ING's Vojtech Benda.
"Even the hawks, however, prefer only a gradual rise in the
interest rate rather than aggressive tightening."
The crown <EURCZK=> rose 0.1 percent against the euro before
the central bank decision at 1200 GMT and news conference at
1330 GMT. Interest rate dealer Dalimil Vyskovsky said markets
have priced in a 20 percent chance of a rate hike.
Forward rate agreements priced in a full 25 basis point hike
only by July <CZKFRA>. The bank's February forecast implies
higher rates as of the end of the year.
Hungary's forint <EURHUF=> rose 0.3 percent and consolidated
above 270 per euro, gaining as the prospect of interest rate
cuts receded. It is the region's top-performing currency in
2011.
The zloty <EURPLN=> rose 0.2 percent despite the euro
weakening versus the dollar after the resignation of Portugal's
prime minister. The Polish unit often tracks moves in the euro,
the region's main reference currency. []
"We do not expect further strengthening of the zloty because
of increased risk aversion connected with the problems in
Portugal," BZ WBK wrote in a morning note.
Romania's leu <EURRON=> fell 0.2 percent to 4.113 per euro,
edging away from highs hit earlier this week after the central
bank said the currency was backed by fundamentals, which
analysts saw as a form of verbal intervention. []
"There is some profit taking in EURRON which pushed the
cross higher," said one dealer in Bucharest. "If it continues,
such moves could push it to about 4.1200/50."
"However, the likely trend is an appreciation with a target
seen at around 4 per euro."
Stocks nudged higher across the region, led by the Budapest
bourse <>, which rose 0.8 percent.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.38 24.394 +0.06% +2.54%
Polish zloty <EURPLN=> 4.024 4.032 +0.2% -1.64%
Hungarian forint <EURHUF=> 268.3 269.01 +0.26% +3.61%
Croatian kuna <EURHRK=> 7.383 7.38 -0.04% 0.04%
Romanian leu <EURRON=> 4.113 4.106 -0.17% +2.92%
Serbian dinar <EURRSD=> 103.34 103.317 -0.02% +2.5%
All data taken from Reuters at 0959 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Sam Cage and Reuters bureaus; Editing by Hugh
Lawson)
