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Central European currencies firmer

LONDON: Central European currencies were mostly firmer on Tuesday with the Polish zloty showing strength despite a delay in a decision to float the currency at a meeting of the central bank and finance ministry.

Traders and analysts said that trading volumes had improved from last week, although they were not back up to pre-Christmas levels.

"We expect a decision on the zloty to be taken in the second quarter. Obviously strong privatisation inflows will drive the zloty stronger," said Stefan Kolek, currency strategist at HypoVereinsbank.

By 1111 GMT, the zloty was trading at 4.174 bid to the euro little changed from the close of 4.1725. It was at 3.34 percent on the strong side of parity against its basket of dollars and euros.

Poland's Finance Ministry and the central bank's Monetary Policy Council on Monday concluded their meeting with no word on the flotation of the zloty when many had been expecting a decision or at least a timeframe for one.

The zloty currently trades in a 30 percent wide trading range and is devalued at 0.3 percent a month.

Elsewhere in Central Europe, the Slovak central bank continued to intervene, at around 42.3 to the euro and the crown was trading at 42.219 bid in mid-morning trade.

"The fact of intervention is marginal," said Kolek. "They cannot do anything in the long run."

Slovak bond yields dipped ahead of a 3.0 billion crown T-bond offering, ahead of strong anticipated demand.

The Czech crown was little changed after Monday's release of December consumer price inflation, which came in higher than expected at 0.5 percent month on month.

The crown was at 35.972 bid to the euro, marginally weaker than 35.97 at Monday's close.

Czech central bank (CNB) Vice-governor Zdenek Tuma said his bias on monetary policy remained neutral despite stronger-than-expected inflation in December, the daily Hospodarske Noviny said on Tuesday. In Hungary, the main news of the day was the addition of 200 million euros to a floating rate issue for a total of 600 million euros.

The forint was trading at compared 254.54 bid to the euro, little changed from 254.63 at Monday's close.

In South Africa, the rand was firmer as the market braces for central bank meetings on Wednesday and Thursday this week, at which a further cut in interest rates is expected.

The rand was at 6.0710 bid to the dollar, little changed from late-Monday trade.

The Israeli shekel continued to rally against the dollar to its highest level in 4-1/2 months with the appointment of David Klein as central bank chief.

It was trading at 4.1009 bid to the dollar.-Reuters