CEE MARKETS-Currencies cling onto gains, US-Russia meeting in focus

By Krisztina Than

BUDAPEST, Aug 11 (Reuters) - Central European currencies held onto last week's gains on Monday, with investors watching the headlines ahead of a planned meeting between U.S. President Donald Trump and Russian leader Vladimir Putin in Alaska on Friday to discuss Ukraine.

"FX in the region received a decent boost last week following the announcement of the U.S.-Russia meeting, and we will be watching for more details this week," ING said in a note. "The Hungarian forint benefits the most from this...given that it's the economy most dependent on energy imports from Russia."

The forint EURHUF= had firmed to around 11-month highs versus the euro by Friday, and on Monday was steady at 395.25.

The region's currencies have strengthened in recent weeks, with the Czech crown touching an 18-month high, as global trade uncertainties eased after the European Union and U.S. reached a deal on tariffs and the dollar softened.

Central Europe's currencies will mostly find support from a weaker U.S. dollar over the next six months, although the forint is set to retreat, a Reuters poll showed on Wednesday.

The Czech crown EURCZK= has been supported by the policy of the central bank, which held its main interest rate steady at 3.50% for a second meeting last Thursday, saying inflation pressures did not allow further easing yet.

"The CZK benefits from a hawkish central bank and... and we believe that the gains here should be more permanent," ING analysts said.

Goldman Sachs, however, said that the appreciation of the crown would help ease inflation and could reopen room for policy easing.

"With this appreciation, we anticipate core inflation will fall sharply through the rest of the year and continue to forecast that Czech interest rates will eventually decline to 2.75%," they said in a note on Friday.

The Polish zloty EURPLN= was trading 0.1% lower at 4.2505.

PKO BP said that the zloty should be fundamentally supported by Wednesday's preliminary second-quarter GDP reading, especially if it falls closer to the upper end of market expectations of 3.3-3.5% year-on-year.

"In a favourable environment, the EUR/PLN exchange rate could break through the technical support at 4.2450 this week, which would pave the way for a move towards 4.23," the bank said in a note.