Adds Hungary cen bank decision, forint reaction, trader quote

By Anita Komuves

BUDAPEST, Oct 22 (Reuters) -Hungary's forint firmed against the euro on Thursday after the central bank left its base rate unchanged, as widely expected, and said it could keep the rate at the current level for a prolonged period if needed.

The forint EURHUF= was up 0.32% on the day and trading at 400.55 per euro at 1347 GMT. The currency briefly firmed past the psychologically important level of 400 after the rate decision was announced but soon gave up those gains.

"The market got what it had expected, that's why we did not see a big move in the forint's rate," an FX trader in Budapest said. "But the central bank's messages could put a cap on weakening for a while."

The National Bank of Hungary kept its base rateHUINT=ECI at 6.50%, halting cuts for now despite inflation falling to its 3% target for the first time since 2021.

The bank couldkeep its base rate at the current 6.5% level for a prolonged period if needed, Deputy Governor Csaba Kandracs said.

The forint, central Europe's worst performing currency in 2024, has weakened sharply in recent weeks, raising speculation of a rebound in price growth and shifting expectations to a pause in rate cuts.

The forint fell beyond the 400-per-euro level this month for the first time since March 2023.

In Poland, the zloty EURPLN= was little moved, edging down 0.02% on the day to 4.32per euro. The Czech crown EURCZK= firmed 0.11% and was trading at 25.242, recovering some losses from the previous session.

Central European currencies have recently come under pressure from uncertainties over the U.S. presidential election, with chances of a Donald Trump victory helping the U.S. dollar and weighing on the region's assets, analysts say.

On Tuesday, the dollar clung to a 2-1/2 month high on expectations the U.S. Federal Reserve will take a measured approach to rate cuts.

"The crown is staying in a lightly defensive position," CSOB bank said. "In the coming sessions, we do not expect any significant improvement (as) nervousness before U.S. elections will be evident in risk assets sensitive to a rise in U.S. market rates."

Additional reporting by Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Mark Potter and Ed Osmond

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