CEE MARKETS-FX hold at strong levels; Romanian leu steady after c.bank comments

PRAGUE, Feb 17 (Reuters) - Central Europe's currencies steadied on Monday after touching their strongest levels so far in 2025 last week, with a weakened dollar and possible talks on resolving the Ukraine-Russia war providing support.

The Polish zloty is hovering near seven-year highs as currencies in the region firmed on the back of a soft dollar as global investors dialled down bets on U.S. tariffs.

Central European stock markets also gained, continuing their gradual climb since the start of the year.

On Monday, the focus was on Paris where some European leaders were expected to meet to discuss Europe's role in any ceasefire in Ukraine, which has repelled a Russian invasion for nearly three years.

U.S. President Donald Trump stunned Ukraine and European allies last week when he announced he had held a call with Russian President Vladimir Putin without consulting them to discuss bringing an end to the conflict.

The zloty EURPLN=, after firming beyond 4.16 to the euro last week, was trading a tad lower at 4.163.

"The zloty remains strong, supported by improved global sentiment, (like the) chances of ending the war in Ukraine, and restrictive monetary policy in Poland," Bank Millennium said.

However, "The drop in the EUR/PLN rate to 4.16 at the beginning of today's session clearly limited the scope for further strengthening."

Central European currencies have been supported by signals from central bankers that they will be cautious about cutting the cost of credit amid persistently high inflation.

On Monday Romania's central bank raised its annual inflation forecast for this year and said it will not return to within the target range before 2026.

A rate cut could serve as an invitation for the leu currency to depreciate, the central bank governor Mugur Isarescu said, adding it was important for the leu not to weaken at a time of high political tension before repeat presidential elections in May.

The leu EURRON=, which has sat out the recent firming among its peers, was little moved at 4.9774 per euro, brushing up against the weaker end of its recent ranges.

In Hungary, the forint EURHUF= dipped 0.2% to 402.50 to the euro, striving to break into the strong side of the psychologically key 400 level for the first time since October.

"The 400 level is the strongest it can firm to now, I think. The movement really slowed down around 402, so the forint will need a new trigger to firm past that," an FX trader in Budapest said.

Similarly, the crown ran out of steam near the 25-per-euro psychological level last week. It was at 25.047 in morning trade.

"No big attack (on that level) so far," a Prague trader said. "But still a bit choppy these days."