* Hungary cbank rates decision seen close, market steady
* Romania govt set to survive no-confidence vote
* Rate decisions eyed in CEE this week
By Jason Hovet
PRAGUE, Dec 20 (Reuters) - The Polish zloty slipped on
Monday but losses were capped at the key 4.00 per euro level,
while the Hungarian forint held steady at a multi-week high
before an expected close interest rate decision later in the
day.
Analysts are evenly split whether Hungary's central bank
will hold pat on interest rates or raise them for a second
straight month to counter inflation risks. []
Some analysts have said the strengthening forint has
diminished the need for another rise for now. However, others
said the bank would still be worried about inflation
expectations and ongoing political and fiscal uncertainties.
The forint <EURHUF=> inched down less than 0.1 percent to
bid at 272.62 to the euro by 0852 GMT, holding near a 6-week
high. Markets expected little reaction from the rate decision.
"The MNB (central bank) is conducting monetary policy in
quite a challenging environment, with large political and
financial uncertainties, and a rate hike has to be seen in this
context," Danske Bank said.
The bank surprised in November with the first policy
tightening in central Europe since the economic crisis started
two years ago. The Polish and Czech central banks are not
expected to follow until next year.
Several analysts have seen the Hungary rate move as part of
a policy battle with the centre-right Fidesz government whose
unorthodox fiscal policy has contributed to higher inflation
pressures and risk premiums, according to the central bank.
NO CONFIDENCE
Stocks were mixed in the region, with Prague <> extending
gains and Warsaw <> down.
In Poland, the zloty <EURPLN=> dipped 0.4 percent, and
analysts expected the psychological 4.0 per euro level to
provide resistance to further weakening.
Dealers have said trade has thinned in the final weeks of
the year, which has at times exaggerated some moves. Central
European currencies have also been unable to break correlation
with their reference currency, the euro, which has been
pressured by a debt crisis in the euro zone periphery.
Romania's leu <EURRON=> was flat ahead of the government's
third no-confidence vote this year, but markets expect the
coalition government to survive the challenge.
A loss would leave a political vacuum just as the country
needs to pass important wage legislation and a 2011 budget to
meet the terms of its IMF bailout.
"These motions send a negative signal to investors and
prolonged political instability will affect foreign investments.
The market has priced-in that the government will survive the
vote", said Melania Hancila, Volksbank's chief economist in
Bucharest.
The Czech centre-right government will face on Tuesday its
first no-confidence vote since taking power in July.
It holds a commanding majority in the lower house and
analysts widely expect it to survive, but a junior coalition
member has not officially come out in support of the government
yet. []
The crown, whose lower yield has made it a funding currency
in intra-region trades recently, was steady at 25.222 per euro.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.222 25.228 +0.02% +4.35%
Polish zloty <EURPLN=> 3.995 3.98 -0.38% +2.73%
Hungarian forint <EURHUF=> 272.62 272.58 -0.01% -0.83%
Croatian kuna <EURHRK=> 7.381 7.379 -0.03% -0.97%
Romanian leu <EURRON=> 4.287 4.287 0% -1.16%
Serbian dinar <EURRSD=> 106.26 106.22 -0.04% -9.77%
All data taken from Reuters at 0952 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Jason Hovet; Editing
by Toby Chopra)
