Forint expected to rebound from record lows on hopes for EU funds: Reuters Poll

Photo illustration of 20,000 Forint notes

By Anita Komuves and Jason Hovet

BUDAPEST (Reuters) - The Hungarian forint should rebound from record lows hit in September, with markets waiting on any deal for Budapest to get European Union funds, but is likely to struggle over the next year to break past the psychological 400 per euro level, a Reuters poll found.

Central Europe's worst performer so far this year with a loss of more than 12%, the forint was expected to firm 4.9% to 400 to the euro in the next 12 months.

The currency has dropped as much as 5% in the past month, hitting a record low of 426 on Monday, pressured by high energy prices, a ballooning current account deficit, a lack of agreement with the European Union over funds and the central bank's announcement it would halt rate hikes.

"In the longer term, the topic of EU money remains on the table and will be with us until at least mid-November. We maintain our optimism related to the deal, giving the forint a boost to rally," Peter Virovacz, senior economist at ING said.

The Polish zloty, which lost 1.7% versus the euro in the past month, was expected to gain 2.4% from Tuesday's closing level in the next year and trade at 4.7.

"Given the interest rate disparities we are recording right now and the fact we are probably close to a turnaround in the U.S. dollar it seems there is room for stronger PLN," said Piotr Bartkiewicz, an economist at Pekao.

On the other side, the Czech crown was likely mostly to tread water over the next year. The central bank has intervened since May to keep the currency from excessive swings as markets get hit by worries over Europe's energy crisis, war in Ukraine and the economic impacts.

Romania's leu, after gains over the summer months, was seen continuing on a weakening path, expected to lose 2.7% to 5.08 per euro in twelve month's time.

(For other stories from the October Reuters foreign exchange polls:)

(Reporting by Anita Komuves in Budapest, Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Josie Kao)