(Corrects exchange rate of Romanian leu in paragraph 7)
By Anita Komuves
BUDAPEST, July 5 (Reuters) - Central European currencies
firmed in low liquidity on Monday as U.S. markets were closed
for a holiday, with the Polish zloty outperforming the region
supported by the possibility of sooner-than-expected monetary
policy tightening in Poland.
The zloty was up 0.23%, trading at 4.5070 versus
the euro common currency.
"Liquidity is so low that it can cause bigger jumps in the
rate," an FX trader in Warsaw said. "The zloty is also supported
by the central bank governor who on Friday, for the first time,
did not exclude the possibility of rate hikes."
Governor Adam Glapinski was quoted in an interview as saying
that "if there are any reasons, for example when inflation is
driven by demand factors, and strong economic growth continues,
we will raise rates."
Rate hikes in Hungary and the Czech Republic in June fuelled
anticipation of sooner-than-expected tightening in Poland as
well, which buoyed the zloty in the past two weeks.
Central banks in Poland and Romania will announce rate
decisions on Thursday, and Glapinski will hold a news conference
on Friday at 1300 GMT.
The Romanian leu edged up 0.04% to 4.9270.
Investors were also eyeing June CPI data in Hungary to be
published on Thursday.
"If inflation comes in higher than expected, that can
strengthen rate hike expectations and could support the
currency," an FX trader in Budapest said.
Central bank deputy governor Barnabas Virag reiterated on
Monday that the National Bank of Hungary would act decisively
and the fastest way possible to counter inflation risks.
Headline inflation came in at an annual 5.1% in May, below
forecasts but above the central bank"s target range of 3% with a
tolerance band of a percentage point on either side.
The Hungarian forint slid 0.05% on Monday and was
trading at 351.69.
Markets in the Czech Republic were closed for a national
holiday on Monday and Tuesday.
Stocks in the region were higher, with Warsaw up
0.33% while Budapest gained 0.24%. Bucharest was
0.43% higher.
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