CEE MARKETS-Currencies flat as Ukraine, inflation data in focus

By Alan Charlish

WARSAW, Aug 12 (Reuters) - Central European currencies hovered around the previous session's closing levels on Tuesday, as investors weighed the chance of a peace deal in Ukraine and digested inflation data from Romania, released earlier.

European leaders and Ukrainian President Volodymyr Zelenskiy plan to speak with United States President Donald Trump on Wednesday, ahead of his meeting with Russian counterpart Vladimir Putin in Alaska, amid fears Washington may dictate unfavourable peace terms to Ukraine.

Central European assets were boosted by news of the Trump-Putin meeting last week, but have generally softened since Monday.

The Polish zloty EURPLN was 0.04% weaker against the euro at 4.2585 at 0759 GMT, having shed around 0.3% on Monday. The Hungarian forint EURHUF= was 0.03% weaker at 395.75.

"I think we last week ended with the big hopes for this meeting of Putin and Trump," said a Warsaw-based FX trader.

"Now there is a little bit of profit-taking and maybe the optimism is fading as people...just start thinking about it, what might be the outcome, and are less optimistic than the way they were on Friday."

Investors looking for clues on the path ahead for Federal Reserve interest rate policy were also waiting for a July U.S. inflation reading.

"Economists expect a slight increase in the main inflation measure and core inflation, and in our opinion, such a result should not cause increased volatility in the FX market," PKO BP said in a note.

The Romanian leu EURRON= was 0.04% weaker at 5.067.

The country's annual inflation rose sharply in July, above market expectations, to its highest level since 2023, as electricity prices surged more than expected after the government's price cap expired.

"Today's inflation figure is all the more interesting given the expected increase from August due to the government's consolidation package, which raises some taxes, including VAT," ING said in a note.

"Therefore, we expect inflation to continue to rise in the coming months, peaking in September and October."

Romania's central bank held its benchmark interest rate ROINTR=ECI at 6.50% as expected on Friday, saying annual inflation will "surge markedly" in the third quarter due to increases in VAT, excise duties and electricity prices.

The Czech crown EURCZK= was 0.03% firmer at 24.459.

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