PRAGUE, April 27 (Reuters) - Hungary"s forint edged up on
Tuesday and slowed a two-week slide, before a central bank
policy meeting at which interest rates are likely to be left
unchanged despite upward inflation pressure.
Other central European currencies eased as the U.S. dollar
hovered above its recent lows and risk appetite eased ahead of a
Federal Reserve policy decision this week.
The forint has roller-coastered this year, dropping nearly
2% at one point in the past two weeks, which followed a sharp
firming after it bounced off all-time lows in March. It was 0.1%
up at 363.40 to the euro at 0953 GMT.
Hungary"s central bank (MNB) expects headline inflation to
approach 5% in the second quarter, well outside the upper bound
of a target range.
Analysts mostly say the bank will stay cautious on trying to
tighten monetary conditions amid an economic recovery from the
coronavirus pandemic.
"Ahead of the central bank decision in Hungary, investors
are assessing whether the MNB will have to support the forint,"
Erste Group Bank analysts said. "The pressure on the HUF might
increase as inflation might surge toward 5% in April."
Elsewhere, the Czech crown lost steam, dropping
0.1% to 25.875 to the euro. Markets are expecting the Czech
central bank, which meets next week, could begin hiking interest
rates later this year although the timing is still uncertain.
Board member Vojtech Benda told Bloomberg news agency the
bank was not likely to raise rates this year as much as assumed
in its staff forecasts.
Romania"s leu and the Polish zloty both
dipped 0.05%.
Warsaw markets were waiting for a Thursday ruling from the
Court of Justice of the European Union (CJEU) over questions
concerning claims banks may be able to make from clients if
foreign currency mortgage contracts are cancelled.
The issue, weighing on the zloty, could result in major
losses for the banking sector, coming after thousands of Polish
borrowers took out Swiss franc loans more than a decade ago.
Warsaw"s WIG20 index dropped 0.3% on Tuesday.
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