* Zloty trades weaker, Polish rate decision eyed
* Lithuania GDP figures still weighing on FX -analysts
BUDAPEST, July 29 (Reuters) - Central Europe's currencies
retreated on Wednesday, signalling that investors' sentiment
towards the region remained fragile as markets eye a Polish
interest rate decision later in the day.
Lithuanian GDP numbers released on Tuesday, which showed a
22.4 percent plunge in economic output, continued to weigh on
central European markets, analysts said.
The key event in the region on Wednesday will be the Polish
central bank's rate decision. All 33 analysts in a Reuters poll
expected Poland's 10-strong Monetary Policy Council to keep the
main rate at a record low of 3.5 percent. []
The zloty <EURPLN=> traded 0.43 percent weaker as investors
were taking profits after a recent rally and the forint
<EURHUF=> was 0.3 percent weaker as Asian stocks dropped and
risk aversion increased in the world, dealers said.
"The EMEA markets seem to be in somewhat of a wait-and-see
stance with the global stock market rally pausing," Danske Bank
said in a comment.
"Despite prospects for an IMF deal for Latvia, the markets
remain worried. The weak Lithuanian GDP numbers for Q2 calls
into question whether the worst is really over for the Baltics,
and the risk of spill over to the rest of CEE remains high."
Investors will be eyeing the Polish central bank's comments
for clues concerning the outlook for interest rates for the
remainder of the year.
"If the council notes that economic situation improved from
earlier expectations it could support the zloty against the
euro," BPH analysts wrote in a morning note.
"However, the global sentiment may prove to be the most
important factor for the zloty, which we expect to stabilise
between 4.15 and 4.2 today."
The Czech crown also pulled back from highs hit in the past
two weeks on profit taking, taking a cue from stock markets,
dealers said.
"The Polish zloty is higher (weaker) so we can go up, too.
It's some profit-taking from recent highs... We are mainly
watching equity markets," a Prague dealer said.
"Asian stock markets tumbled, and there is a rise in risk
aversion," a Budapest-based dealer said, adding that domestic
data and factors had no impact on local markets.
Hungary's unemployment rate dipped to 9.6 percent in
April-June but stayed near 13-year highs as the economy
continued to suffer from a deep economic crisis, the Central
Statistics Office (KSH) said earlier on Wednesday.[]
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.564 25.525 -0.15% +4.65%
Polish zloty <EURPLN=> 4.202 4.184 -0.43% -2.07%
Hungarian forint <EURHUF=> 270.25 269.35 -0.33% -2.48%
Croatian kuna <EURHRK=> 7.326 7.333 +0.1% +0.53%
Romanian leu <EURRON=> 4.215 4.209 -0.14% -4.76%
Serbian dinar <EURRSD=> 93.35 93.413 +0.07% -4.15%
All data taken from Reuters at 0937 CET.
Currency percent change calculated from the daily domestic
close at 1647 CET.
(Reporting by Krisztina Than; Editing by Andy Bruce)
