CEE forex seen retreating, leu and crown to gain later

Analysts expect Romania's leu to outperform its Central European peers in the next 12 months according to a Reuters poll published on Thursday as political tensions which have knocked the currency down are seen easing towards the end of 2012.
However, the poll of 27 analysts conducted on August 7-8 showed that all of the region's currencies would ease in the next three months as the euro zone's debt crisis rumbles on and Europe grapples with an economic slowdown, which also hits its emerging members.
Increased risk appetite in Europe in the past weeks has boosted demand for central Europe's high-yielding bonds and currencies, but this is unlikely to last.
The Czech crown has lagged the forint's and the zloty's strong gains so far this year, while political troubles pushed Romania's leu to record lows against the euro last week.
The poll showed that the laggards - the crown and the leu - have room to strengthen in the 12-month term, while analysts believe the forint's and zloty's gains are overdone.
The crown is expected to firm 2.4 percent to 24.53, while the leu could gain 3.3 percent to 4.4. Analysts said the recent sell-off which knocked the leu down to record lows was caused by political infighting which will not hurt Romania's economic fundamentals in the long term.
"I expect these (political problems) to continue in the short run, but after parliamentary elections (in November) the situation may calm down somewhat," said Daniel Lenz, analyst of DZ Bank. "Quotes should 'normalise' and the leu may benefit from further demand for CEE currencies in the next 12 months."
The zloty hit a one-year high versus the euro this week, testing the 4.0 level, while the forint reached 11-month highs at 275.
Analysts said economic slowdown in Europe's emerging markets can become an increasing worry in the next few months if measures by European leaders and the European Central Bank do not ease the euro zone debt crisis.
The poll sees the zloty, which has gained about 10 percent this year, shedding 3.1 percent from Wednesday's close by the end of October to 4.2, while the forint is expected to give up about 3 percentage points of this year's over 13 percent gain.