* HUF seen firming to 272/euro in 12 mths (prev fcast 272.5)
* Zloty seen strengthening to 3.79 (vs 3.8 prev fcast)
* Crown expected to firm to 24 (prev fcast 24.2)
* Leu seen at 4.2 vs euro in 12 mths (prev 4.16)
By Sandor Peto
BUDAPEST, Jan 5 (Reuters) - The Polish zloty is set to lead
central European currencies higher in 2011 on the back of
economic recovery and monetary tightening, although the euro
zone debt crisis will cap their gains early in the year, a
Reuters poll forecast on Wednesday.
The zloty <EURPLN=> is expected to firm 4.4 percent against
the euro in 2011, the Czech crown <EURCZK=> stands to appreciate
4.3 percent while the Hungarian forint <EURHUF=> will rise 2.2
percent and the Romanian leu <EURRON=> 1.5 percent, according to
the poll of 38 analysts taken on Jan. 3-4.
The forecasts were slightly more bullish than in a similar
poll a month ago.
Central Europe's emerging economies have generally stronger
growth potential and higher interest rates than their richer
west European peers.
Analysts said ample global liquidity would continue to buoy
emerging market assets, but appetite for central European
currencies would also be hampered in the next months by concerns
that some euro zone states may run into difficulty financing
their debt.
"The (short-term) outlook is stable as you got conflicting
factors," said Koon Chow of Barclays.
"On the one side you have euro area problems, but as a
positive factor you've got continued cyclical recovery and
(central bank interest) rate hikes in some countries -- the two
will likely balance each other out."
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For a graphic on central European currencies, click on:
http://graphics.thomsonreuters.com/11/01/FX_CEEPLL0111.html
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Central European countries rely heavily on exports to
western Europe and their currencies' performance was mixed last
year with fears about contagion from euro zone debt problems
weighing on sentiment.
The region's safe haven unit, the Czech crown, outperformed,
strengthening 5.3 percent against the euro in 2010. Poland's
more resilient economy boosted the zloty by 3.8 percent, while
the forint shed 2.7 percent and the leu eased by 0.2 percent.
The latest poll forecasts for this year were slightly more
optimistic than in a poll a month ago. The median 12-month
forecasts changed to 3.79 per euro for the zloty in the latest
poll, from 3.8 a month ago; to 24 for the crown, from 24.2; and
to 272 per euro for the forint, from 272.50.
The leu was the exception. It now is seen at only 4.2 versus
the euro in 12 months, compared to a 4.16 in the previous poll.
MONETARY TIGHTENING
Rapid capital inflows are less of a concern in central
Europe than in other emerging markets such as Brazil as the
region's currencies are still far from record highs hit in
2007-2008 and inflation fears are expected to spur interest rate
rises.
Hungary's central bank has already lifted its base rate
twice since late last year to 5.75 percent, partly because of
concerns that government measures to cut the budget deficit
would not be sustainable in the long term.
Analysts said their forecasts for a firming forint assume
Budapest would announce longer-term spending cuts by February as
it has promised.
"Should this fail to happen, we can imagine a negative
scenario in which ratings agencies would downgrade the country
into junk category and in which the forint would weaken
significantly versus the euro," said CIB Bank's Gyorgy Barta.
Polish central bank Governor Marek Belka said on Tuesday
that it was time to begin gradual monetary tightening
[] and some analysts forecast the bank will raise
its key rate from 3.5 percent at its Jan. 18-19 meeting.
The government is struggling to keep public debt under the
legal limit of 55 percent of gross domestic product and avoid
painful spending cuts before elections in October. But Poland's
debt is much lower and its economic growth much stronger than in
Hungary.
"Fiscal concerns and the euro crisis outweigh monetary
tightening and strong growth in the first half of 2011," said
Ralf Wiegert of IHS Global Insight. "But the ongoing strength of
Poland's growth momentum will dominate afterwards and force the
zloty back into appreciation mode again."
Poland, the only European Union member to avoid recession
last year, forecasts economic growth of 3.5 percent in 2011,
higher than other countries in the region.
In the Czech Republic, where inflation is relatively benign,
the central bank is not expected to start to raising its key
interest rate from 0.75 percent until the middle of the year.
[]
"While the crown is expected to remain mostly resilient to
euro zone-related problems, the dovish stance of the local MPC
(central bank monetary policy committee) should prevent
appreciation in the first quarter of 2011," said Peter Poplawski
of BGZ Bank."
In Romania, the economy is still in recession and the
country's fragile government is carrying out budget cuts.
The central bank is expected to keep its benchmark policy
rate at 6.25 percent in the next two months and then cut it to
5.75 percent later this year, countering the regional trend.
[][]
For forecast data please click on <CEEFXPOLL01>
More analyst comments on CEE currencies: []
Latest Reuters polls on other currencies <FOREXPOLL01>
(Reporting by Sandor Peto and Marton Dunai; Editing by Susan
Fenton)
