* Polish central bank seen raising rates to 3.75 pct
* Forint drops 0.2 percent, underperforming region
* Analysts factor in pause in Hungary tightening cycle
BUDAPEST, Jan 17 (Reuters) - Poland's zloty extended recent
gains versus the euro in early Monday trade, underpinned by
market expectations of an imminent interest rate hike, while
other central European currencies were mixed.
The zloty <EURPLN=>, seen as the region's best performer
this year [], gained 0.2 percent from its Friday
close and was up by 2.5 percent since Jan. 1, just behind the
safe-haven Czech crown <EURCZK=>, which has gained 2.6 percent.
Markets expect the National Bank of Poland to become the
second central bank in emerging Europe to kick off monetary
tightening after Hungary began raising rates in November.
Poland, like Hungary, is trying to keep rising inflation in
check.
A Reuters poll showed 17 of 29 analysts expect the Polish
central bank's 10-strong Monetary Policy Council (MPC) to raise
the key interest rate by 25 basis points on Jan. 19 from its
record low of 3.5 percent. []
Bank BPH expects the zloty trading session to be relatively
calm, also due to the absence of U.S. investors. According to
the bank, the zloty should trade in a range of 3.85 and 3.88
versus the euro.
A currency dealer in Budapest said a rate rise in Warsaw
could also boost the Hungarian forint <EURHUF=>, which generally
benefits from gains in the Polish currency.
"We're in for a quiet day as there is no U.S. market," the
dealer said. "In the near term, the forint can be influenced by
the Polish rate decision. If the zloty gains, the forint can
follow suit."
At 0828 GMT, the forint <EURHUF=> was down 0.2 percent,
underperforming the region's other currencies, which were flat
to a touch stronger.
Hungary's central bank meets next Monday to discuss policy
and analysts are beginning to factor in the possibility it may
hold fire on Jan. 24 after a combined 50 basis points of rate
rises to 5.75 percent <NBHI> over the past two months.
Central bank Deputy Governor Ferenc Karvalits told Reuters
on Friday the bank can go slowly with its cycle of monetary
tightening and can include pauses of 1 or 2 months between
hikes. []
"We expect the central bank to stand still in January and
observe further inflation developments," Commerzbank said in a
note.
Czech industrial producer prices rose 1.0 percent
month-on-month in December and 3.6 percent year-on-year, above
market expectations, data showed on Monday. []
Analysts had forecast a 0.6 percent month-on-month increase
and a 3.2 percent year-on-year growth <CZ/ECON04> <CZ/ECON15>
<ECONCZ>.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.36 24.365 +0.02% +2.63%
Polish zloty <EURPLN=> 3.862 3.869 +0.18% +2.49%
Hungarian forint <EURHUF=> 276.05 275.43 -0.22% +0.7%
Croatian kuna <EURHRK=> 7.393 7.395 +0.03% -0.18%
Romanian leu <EURRON=> 4.259 4.26 +0.02% -0.61%
Serbian dinar <EURRSD=> 104.8 105.05 +0.24% +1.08%
*Benchmark is German bond equivalent.
All data taken from Reuters at 0928.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
For related news and prices, click on the codes in brackets: All
emerging market news []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, Writing by Gergely Szakacs;
Editing by John Stonestreet)
