CEE MARKETS-Forint, crown hold close to recent highs with rate decisions due

WARSAW, March 24 (Reuters) - Central and eastern European currencies held close to recent highs on Monday with expectations that Hungarian and Czech central banks will keep interest rates on hold this week, and as markets watch U.S.-Russian talks over the Ukraine war.

U.S. and Russian officials began talks in Saudi Arabia aimed at making progress towards a ceasefire in Ukraine as Washington eyed a separate Black Sea maritime ceasefire deal before securing a wider agreement.

U.S. President Donald Trump is stepping up his drive to end the three-year-old conflict after he last week spoke to both Ukrainian President Volodymyr Zelenskiy and Russian President Vladimir Putin.

At 1107 GMT the Hungarian forint EURHUF= was steady against the euro at 398.05, after touching a 5-1/2 month high of 396.90 last week.

The forint is Central Europe's top performing currency so far this year, gaining more than 3% and making up ground after leading losses in 2024.

The National Bank of Hungary (NBH) is on Tuesday expected to keep its base rate steady at 6.5%, the European Union's joint-highest level, at new Governor Mihaly Varga's first policy meeting as inflation rebounds to the highest levels in the bloc.

"The Hungarian forint remains vulnerable, and its stabilisation will be in focus," Erste Group Bank analysts said, noting the low volatility of emerging European currencies last week.

The Czech crown EURCZK= edged 0.1% higher to 24.9520 per euro, clinging on to the stronger side of the psychological 25 level. It had traded beyond 24.90 in late-February, its strongest since mid-2024.

According to a Prague-based currency trader, the crown was tracking the forint and zloty moves and is "of course supported by 'no change' expected from the (central bank) on Wednesday".

Nearly all the analysts polled by Reuters expect the Czech National Bank (CNB) to hold rates for a second meeting on Wednesday, opting for caution amid inflationary pressure and global macroeconomic uncertainty.

In Poland, the zloty EURPLN= gained 0.2%, to 4.18 per euro.

A Warsaw-based currency trader said the zloty was experiencing a period of lower volatility with weaker client flows.

"For now, this geopolitical news is relatively subdued, so there is no tendency to run away from here... Short-term capital has somehow become less active lately."

The trader added that 4.20 was a good cap for euro-zloty, which has been trading sideways.

"Today is another round of talks in Riyadh, the Americans are meeting with the Russians, so we'll of course be looking at that," adding that Monday's macroeconomic data readings were not having a great effect on the zloty.

Polish retail sales unexpectedly fell in February with a decline or slowdown in sales affecting all goods categories.

Analysts said the weak reading does not indicate a worsening financial situation of households, but rather their increasing prudence in making purchasing decisions.

For related news and prices, click on the codes in brackets:
All emerging market news EMRG CEEU CEE/

Spot FX rates
Eastern Europe spot FX EEFX=  Middle East spot FX MEFX=
Asia spot FX ASIAFX=          Latin America spot FX LATAMFX=

Other news and reports
World central bank news CEN Economic Data Guide ECONGUIDE
Official rates GLOBAL/INT   Emerging Diary EMRG/DIARY
Top events M/DIARY  Diaries DIARY Diaries Index IND/DIARY