CEE MARKETS-FX rattled by Russian sanctions, zloty falls from perch

WARSAW, Oct 23 (Reuters) - Poland's zloty retreated from a more than six-month high and other central European currencies fell on Thursday, as investors paused to assess the impact of new western sanctions on Russia.

Emerging market assets weakened on Thursday after the U.S. and the European Union ratcheted up pressure on Russia, casting a shadow over the region that has posted robust returns this year.

Prospects of a major breakthrough in resolving the conflict had bolstered hopes among investors this month, but those expectations quickly faded after a planned summit between U.S. President Donald Trump and his Russian counterpart Vladimir Putin was put on hold.

The Polish zloty EURPLN= had slipped 0.3% against the euro to 4.2360 by 0909 GMT, after it hit its highest level since April at 4.2230 in the previous session.

POLISH RATES SHOW DIFFERENT DIRECTION

ING analysts said "the market shows that PLN has some potential, although rates point rather in the opposite direction".

Poland's central bank cut its key interest rate for a fourth time this year in October citing easing inflation and, while saying future decisions would be data-driven, it did not rule out more easing in November.

"We suspect that the support (for the zloty) may have been a consequence of capital inflows into the domestic debt market, including before today's Ministry of Finance auction," analysts at state-run development bank BGK said.

According to a Warsaw-based currency dealer, Wednesday's high took place at low volumes and may have come on the back of exporters hedging their positions as the zloty firmed.

HUNGARY LOCAL MARKETS CLOSED

The Czech crown EURCZK= traded 0.2% lower at 24.34 per euro, range-trading near its strongest level since September 2023, hit earlier this month.

"Despite the introduction of sanctions against Russia, the Czech crown is not leaving the vicinity around 24.30 EUR/CZK," analysts at lender CSOB noted.

"Very slight losses could be attributed to the slightly worse mood on the stock markets, but the relative stability of the euro-dollar ultimately did not provide much opportunity for more active trading in euro-crown," they added.

Elsewhere, the Hungarian forint EURHUF= fell 0.4% to 390.35 per euro, as local markets were closed for a long weekend. It remained near its strongest level in almost 17 months, also touched in early October.

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