* Zloty hits highest since Dec. 6, moves away from 4.0/euro
* Polish inflation seen at 2.8 pct in November
By Marius Zaharia
BUCHAREST, Dec 14 (Reuters) - The Polish zloty rose to
one-week highs on Tuesday, supported by expectations that
inflation data due later in the day may bring more bets on
higher interest rates.
The unit broke through the psychological 4.0 per euro level
late on Monday and could firm even more if November's annual
inflation turns out to be in line with or better than the 2.8
percent consensus forecast, dealers said.
"Today's data ... is likely to provide further potential for
a zloty recovery," analysts at Commerzbank wrote in a note.
"A further rise of 2.8 percent year-on-year ... would mean
that inflation would exceed the central bank target of 2.5
percent for the second consecutive time, calling the hawks among
the MPC (Monetary Policy Council) members to the fore."
Poland's key interest rate has stood at a record low 3.5
percent for 17 months and analysts polled by Reuters expect
borrowing costs to remain flat until the end of the year.
At 0831 GMT, the zloty <EURPLN=> was up 0.3 percent on the
day at 3.987 per euro, after hitting 3.98 earlier in the
session, its highest since Dec. 6.
Hungary's forint <EURHUF=>, Romania's leu <EURRON=> and the
Czech crown <EURCZK=> were nearly flat from the previous close.
In Hungary, central bank Governor Andras Simor told the Wall
Street Journal that one interest rate hike will not be enough to
get inflation back on target, but not "many" steps were needed
in a tightening cycle begun last month [].
The central bank delivered a surprise 25 basis point rate
hike on Nov. 29, the first step towards tighter monetary policy
seen anywhere in the region.
Simor also criticised the government's plan to give itself
control over the appointment next March of four new members to
the seven-strong Monetary Council, which sets interest rates.
Analysts say the new members are likely to reflect the
government's dovish bent on monetary policy and there has been
speculation the central bank's inflation target could be raised.
The move is one of several that have shaken up markets since
the Fidesz government took power earlier this year.
On Monday, Hungary rolled back a 1997 pension reform,
effectively allowing the government to seize up to $14 billion
in private pension assets to cut the budget deficit while
avoiding austerity measures [].
Dealers in Prague said the crown should stay in a weakening
bias for the rest of the year. The unit had gained more than 7
percent this year but has lost 2.7 percent since November.
"The crown is being driven by the euro/dollar like other
currencies in the region," a Prague dealer said.
"At the end of the year people are trying to square
positions ... and buying euro/crown. It makes sense, since we
haven't really seen any correction for the last year and a
half."
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.128 25.107 -0.08% +4.74%
Polish zloty <EURPLN=> 3.987 3.999 +0.3% +2.93%
Hungarian forint <EURHUF=> 276.35 276.7 +0.13% -2.17%
Croatian kuna <EURHRK=> 7.409 7.405 -0.05% -1.35%
Romanian leu <EURRON=> 4.285 4.289 +0.09% -1.11%
Serbian dinar <EURRSD=> 105.71 106.61 +0.85% -9.3%
All data taken from Reuters at 0931 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Marius Zaharia;
Editing by Catherine Evans)
