* Currency rally continues but at slower pace
* Polish markets watching for CPI forecast
By Marius Zaharia
BUCHAREST, July 1 (Reuters) - Central European currencies
continued a rally on Wednesday, with the Czech crown and
Hungarian forint hovering near 2009 highs, but they firmed at a
slower pace than previously as some investors took profits.
By 0716 GMT, the forint <EURHUF=> was 0.3 percent up on the
day to bid at 271.5 to the euro and the crown <EURCZK=> edged up
0.4 percentto 25.887. The Polish zloty <EURPLN=> gained 0.8
percent, while the Romanian leu <EURRON=> added 0.2 percent.
"We broke through a key resistance level at 275 (forints) on
Tuesday and some investors tried to push it down towards 270 but
the unit bounced back, which indicates that there are quite a
few positions still built in," a Budapest dealer said.
"There was a lot of news on the market yesterday -- both
domestic and regional -- and I think we're still digesting it,
so given the gains, given yesterday's big moves all around, I
expect a slow day."
The Hungarian forint surged over 1.5 percent on Tuesday, a
day after parliament approved crucial 2010 tax legislation and
due to better-than-expected first quarter current account and
May producer prices data. []
It was closely followed by the Czech crown and the zloty,
which also benefited from an improved global mood. But dealers
said those currencies all hit technical support levels which
prompted investors to book profits and slow down the rally.
"The crown is still strongly overvalued, so any failed
attempts at stronger levels will be a good opportunity to buy
euro/crown," a Prague dealer said.
In Poland, where data showed on Wednesday that the PMI
inched up again [], markets were watching for the
finance ministry's inflation forecast which is key to setting
interest rate expectations.
A rally in emerging Europe, led by the crown which has
gained around 14 percent since mid-February, has revived
expectations of interest rate cuts in the region.
In Hungary, central banker Peter Bihari said on Tuesday the
central bank was on the brink of lowering rates again
[], while in Romania, analysts expect more easing
following a cut on Tuesday.
But analysts say the rally is losing steam as the region's
problems such as banks' fragility, a possible currency
devaluation in Latvia and deepening recessions were still
reasons for concern.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.887 25.999 +0.43% +3.35%
Polish zloty <EURPLN=> 4.426 4.46 +0.77% -7.03%
Hungarian forint <EURHUF=> 271.52 272.3 +0.29% -2.94%
Croatian kuna <EURHRK=> 7.268 7.27 +0.03% +1.33%
Romanian leu <EURRON=> 4.198 4.206 +0.19% -4.37%
Serbian dinar <EURRSD=> 93.43 93.44 +0.01% -4.23%
All data taken from Reuters at 1016 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 ...)
