* Zloty edges up as rate hike expectations consolidate
* HUF helped by cbank talk, mid-term trend hinges on budget
* Political bickering keeps tension in Romanian markets
By Marius Zaharia
BUCHAREST, Dec 15 (Reuters) - Central European currencies
were stable to a touch higher on Wednesday as investors focused
on growing expectations for interest rate rises in Hungary and
Poland and shrugged off the euro's weakness in thin trade.
The Polish zloty and Hungarian forint broke their 200-day
moving averages at 3.9870 and 276 per euro, respectively, on
Tuesday, which could support further gains, although pre-holiday
trade provides little ammunition to consolidate the trend.
The zloty's move was fuelled by data showing November
inflation at 2.7 percent, a touch below consensus, but above the
central bank's 2.5 percent target, thus keeping expectations for
higher interest rates in the near future intact.
The forint was boosted by central bank Governor Andras Simor
saying one interest rate hike would not be enough to get
inflation back on target and a pledge by Economy Minister Gyorgy
Matolcsy that Hungary would enforce spending cuts in February.
At 0837 GMT, the zloty <EURPLN=> traded 0.1 percent higher
at 3.983 per euro, slightly off two-week highs of 3.9685 hit
overnight. The forint <EURHUF=> was flat at 274.88 per euro.
"Speculation surrounding another rate rise in December
provided momentary support for the forint," Commerzbank said in
a note. "Medium term, the government's reform policy will
however determine its fate."
One trader, however, said the forint could be hit late in
the session by the Swiss franc's rise to around 1.28 versus the
euro, a near record high. Hungarian households' large exposure
to franc-denominated loans taken during the boom years has
created risk for them, and Hungary's economy, as the franc
appreciates.
"We should not be here really," the Budapest-based trader
said. "If the euro firms, we firm along, if it weakens, we do
nothing, it is rather odd."
The 275.20 level was seen as a key support level for the
euro against the forint.
In Romania, local assets continue to be affected by
political wrangling. The opposition has said it plans to file
another no-confidence motion against the government, which
submitted a key state wages reform bill to parliament on
Tuesday.
Analysts widely expect the government to survive the
no-confidence vote, which would be the third this year. However,
traders said tension remains in the market, keeping the leu
within this year's narrow trading range of 4.2-4.3.
The Romanian leu <EURRON=> was a touch higher on the day at
4.282, while the Czech crown <EURCZK=> was flat.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.13 25.137 +0.03% +4.73%
Polish zloty <EURPLN=> 3.983 3.986 +0.08% +3.04%
Hungarian forint <EURHUF=> 274.88 274.92 +0.01% -1.65%
Croatian kuna <EURHRK=> 7.389 7.393 +0.05% -1.08%
Romanian leu <EURRON=> 4.282 4.286 +0.09% -1.04%
Serbian dinar <EURRSD=> 104.92 105.11 +0.18% -8.62%
All data taken from Reuters at 0936 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 Susan Fenton)
