BUDAPEST, March 2 (Reuters) - East Europe's currencies were
little moved on Wednesday, eyeing the Polish rate decision later
in the day, with the forint recouping some of its losses but
with disappointment still lingering over the government's
reforms.
Analysts expect the Polish central bank to tighten monetary
policy again in March or April although they were almost evenly
split on the exact timing in a Reuters poll. []
A very slim majority of analysts expected the bank to leave
rates unchanged at its meeting on Wednesday.
"Today attention will focus on the Polish central bank's rate
decision. The recently weaker retail sales data, as well as
constant wage growth, are indicating that the central bank will
leave key rates unchanged," Commerzbank analysts wrote.
"The surprise potential on the downside of EURPLN is likely
to be bigger than that on the upside," they added.
Data showed that Polish economic growth <PLGDP=ECI>
accelerated to 4.4 percent year-on-year in the fourth quarter of
2010, as forecast, helped by strong domestic demand.
[]
Analysts in a Reuters poll had forecast growth in the
October-December period at 4.4 percent year-on-year.
Hungary's forint <EURHUF=> recouped some of its losses from
earlier in the morning with investors still digesting the
government's fiscal plans after markets fell on Tuesday as they
thought the plan lacked much of the detail markets had counted
on.
At 0920 GMT the forint was flat versus the euro, while the
Polish zloty <EURPLN=> was also steady. The Czech crown
<EURCZK=> was down 0.1 percent and the Romanian leu <EURRON=>
inched down 0.1 percent.
"The market was disappointed yesterday ... and as long as we
do not see concrete measures the market will continue to be
cautious," a Budapest based FX dealer said.
Budapest stocks <> extended losses, falling 0.8 percent
by 0922 GMT, with OTP <OTPB.BU> -- Hungary's biggest lender --
losing 2 percent after the government announced it would keep a
windfall bank tax in place longer than previously planned.
Warsaw stocks were also down 0.7 percent, while the Prague
bourse was down 0.4 percent.
Hungary's Economy Minister Gyorgy Matolcsy said on Tuesday
the government would take measures to improve the budget balance
by 900 billion forints by 2013, and drive down public debt to
65-70 percent of GDP by the end of 2014 from around 80 percent
now. []
While analysts said the direction of the measures was
positive, many of them said important details were still lacking
and execution of the plan would be closely watched.
"Clearly, the fact that the Hungarian government is actively
addressing the longer-term fiscal issues is a positive and has
also likely alleviated the risk of a downgrade to non-investment
grade status by the rating agencies in the short term," Barclays
said in a note.
"However... the plans revealed today still leave many
details open regarding the implementation of announced measures,
particularly in light of the potentially adverse public opinion
ahead of the 2014 elections."
The crown <EURCZK=> kept below the resistance of 24.400 per
euro and dealers said no weakening above that level was likely.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown <EURCZK=> 24.34 24.321 -0.08% +2.71%
Polish zloty <EURPLN=> 3.975 3.974 -0.03% -0.43%
Hungarian forint <EURHUF=> 272.3 272.4 +0.04% +2.09%
Croatian kuna <EURHRK=> 7.419 7.419 0% -0.53%
Romanian leu <EURRON=> 4.208 4.203 -0.12% +0.59%
Serbian dinar <EURRSD=> 104.17 103.4 -0.74% +1.69%
*Benchmark is German bond equivalent.
All data taken from Reuters at 1015 CET.
Currency percent change calculated from the daily domestic
close at 1700 GMT.
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(Reporting by Krisztina Than; editing by Stephen Nisbet)
