CEE MARKETS-Forint weakens after cenbank leaves one-week deposit rate unchanged

By Anita Komuves BUDAPEST, Jan 20 (Reuters) - The Hungarian forint underperformed its regional peers on Thursday after the National Bank of Hungary left its one-week deposit rate unchanged at a weekly tender for the third time in a row, disappointing some investors. The forint slid 0.36% to 356.80 per euro as the central bank left its deposit rate at 4%. The bank uses the one-week deposit rate to tackle short-term market volatility and it is above its base rate which is at 2.4%. "A few investors expected a hike after December inflation data published last week showed that CPI remained high," an FX trader in Budapest said. Hungarian inflation stayed stuck at a 14-year high of 7.4% year-on-year in December, defying expectations of a slowdown. The central bank has been raising interest rates to fight inflation since last year, but has left its one-week deposit rate unchanged in the past three weeks as the forint gained more than 3.7% since the start of they year, traders said. "A stronger currency can provide more patience when it comes to tightening monetary policy," Morgan Stanley wrote in a note. "However, becoming too complacent can backfire as we see the central bank's commitment to rate hikes as the main driver behind the relative strength in the forint." The National Bank of Hungary holds its next rate-setting meetin on Jan. 25 where a Reuters poll of analysts expects the base rate to be hiked by another 30 basis points to 2.7%, the highest in almost eight years. Elsewhere, the Czech crown edged down 0.02% to 24.2700 to the euro after firming to its strongest since 2011 in the previous session. The Polish zloty was up 0.02% and trading at 4.5218 versus the common currency, extending its gains from the past month. However, "heightened geopolitical tension in the region, the upcoming next wave of the epidemic ... and the downward revision of expectations for NBP interest rates" constitute the risk for the zloty, Alior Bank wrote in a note. Stock markets in the region weakened, with Prague leading losses as it eased 0.71%. Budapest was 0.18% lower and Warsaw slid 0.53%. CEE SNAPSH AT MARKETS OT 1049 CET CURREN CIES Latest Previo Daily Change us bid close change in 2022 EURCZK Czech 0 0 % EURHUF Hungary 00 00 % EURPLN Polish % % EURRON Romania % EURHRK Croatia EURRSD Serbian 00 00 % % Note: calculated from 1800 daily CET change Latest Previo Daily Change us close change in 2022 .PX Prague 1427.5 1437.7 -0.71% 5 000 .BUX Budapes 53026. 53121. -0.18% +4.55 t 34 90 % .WIG20 Warsaw <.WIG20 2304.7 2316.9 -0.53% +1.67 > 3 4 % .BETI Buchare 13093. 13128. -0.26% +0.25 st 64 23 % .SBITO Ljublja <.SBITO 1331.4 1326.4 +0.38 +6.05 P na P> 1 1 % % .CRBEX Zagreb <.CRBEX 2209.6 2213.2 -0.16% +6.27 > 8 6 % .BELEX Belgrad <.BELEX 861.71 861.71 +0.00 +4.99 15 e 15> % % .SOFIX Sofia <.SOFIX 638.02 631.58 +1.02 +0.37 > % % Yield Yield Spread Daily (bid) change vs change Bund in Czech spread Republi c CZ2YT= ps CZ5YT= 0 ps CZ10YT 0 ps Poland PL2YT= ps PL5YT= 0 ps PL10YT 0 ps FORWARD 3x6 6x9 9x12 3M interb ank Czech Hungary Poland Note: are for ask FRA prices quotes **************************************** ********************** (Additional reporting by Alan Charlish in Warsaw; Editing by Amy Caren Daniel)