PRAGUE: Emerging European currencies opened a touch lower on Wednesday as risk appetite stayed subdued due to uncertainty over Greece's future in the euro zone, with regional interest focused on a possible interest rate hike in Poland.
The euro, which the region's currencies tend to track, fell close to three-month lows on concerns that a political impasse in Greece as well as a leadership change in France may undermine the euro zone's commitment to austerity.
"Risk is off globally, meaning emerging markets and equities are likely to weaken, while the dollar remains stronger," a Prague-based dealer said. "It's a combination of the stalemate in Greece and the new French president."
Socialist Francois Hollande has advocated an approach to tackling the debt crisis that focuses more on growth, which may create tensions between France and Germany, which is continuing to insist on fiscal austerity.
By 0732 GMT the Czech crown fell 0.08 percent to 25.215 while the zloty shed 0.1 to 4.204 per euro.
Poland's central bank votes on interest rates later on Wednesday. Nineteen of 28 analysts in a Reuters poll see the key rate held at 4.50 percent while nine, mindful of a high inflation rate, forecast a hike.
"We assume that inflation as well as growth will slow more notably over the coming months so that a rate hike would turn out to be a mistake," analyst Thu Lan Nguyen at Commerzbank said in a note.
"If key rates remain unchanged, as we expect, the zloty is likely to come under depreciation pressure short term. We expect the resistance in EURPLN at 4.23/24 to hold though," the note added.
Hungary's forint shed 0.1 percent to 287.41 per euro. Two central bankers told Reuters on Tuesday that Hungary, which recently got the green light from the European Union to begin talks on a much-needed financial assistance package from the EU and the IMF, could begin to reduce interest rates once the talks begin.
"This, in our view, suggests that rate cuts may start around September," Citibank said in a note to clients, adding that an IMF deal was likely by the end of 2012.
The resulting reduction in risk premia and a benign inflation outlook would allow the central bank to deliver 100-150 basis points worth of rate cuts gradually, Citi added.
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