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CEE MARKETS-Crown steadies after rally before central…

PRAGUE, Aug 6 – The Czech crown steadied near a multi-month high on Thursday after rallying this week before the central bank meets, with interest rates expected to remain unchanged. Other central European currencies pulled back from gains in the previous session, led by the Hungarian forint easing 0.4%. A Reuters poll on Thursday forecast most currencies in the region would gain in the coming year as worries about a rise in new coronavirus cases diminish and hopes for economic recovery grow. The crown was expected to gain the most, reaching 25.725 to the euro over the next 12 months. The Czech currency traded at 26.107 per euro at 0834 GMT, before the central bank decision. It touched its highest since mid-March on Wednesday. Czech policymakers have been among the most aggressive in cutting borrowing costs to deal with the economic fallout of the coronavirus pandemic. The central bank has slashed 200 basis points off its base rate, to 0.25%, since March, but it is widely expected to put rates on hold the rest of the year. “Even though there were indications recently that the economic recovery might lose momentum … the collapse of Q2 GDP on the other hand was slightly less dramatic than the consensus and central bank had feared,” Commerzbank said. “The development of inflation too is largely within the scope of CNB´s expectations in May which means that there is no immediate need for action on the part of the central bank.” The Czech economy fell by 10.7% year-on-year in the second quarter, according to a flash estimate on July 31. It was the first release in the region, with others reporting next week. Elsewhere, the Polish zloty dropped 0.1% to 4.409 to the euro. The Romanian leu was steady at 4.835 after the country’s central bank unexpectedly cut its benchmark interest rate by 25 basis points to 1.50% on Wednesday and pledged to continue providing liquidity. CEE SNAPSHO AT MARKETS T 1034 CET CURRENC IES Latest Previou Daily Change s bid close change in 2020 EURCZK Czech <EURCZK 26.1070 26.1015 -0.02% -2.59% = crown => EURHUF Hungary <EURHUF 346.300 344.800 -0.43% -4.38% = forint => 0 0 EURPLN Polish <EURPLN 4.4090 4.4038 -0.12% -3.46% = zloty => EURRON Romanian <EURRON 4.8350 4.8342 -0.02% -0.97% = leu => EURHRK Croatian <EURHRK 7.4660 7.4683 +0.03% -0.28% = kuna => EURRSD Serbian <EURRSD 117.510 117.610 +0.09% +0.05% = dinar => 0 0 Note: calcula 1800 daily ted CET change from STOCKS Latest Previou Daily Change s close change in 2020 .PX Prague 904.36 906.410 -0.23% -18.94% 0 .BUX Budapest 35141.4 35103.3 +0.11% -23.74% 8 9 .WIG20 Warsaw <.WIG20 1825.36 1833.20 -0.43% -15.10% > .BETI Buchares 8542.38 8559.45 -0.20% -14.38% t .SBITO Ljubljan <.SBITO 840.53 842.54 -0.24% -9.22% P a P> .CRBEX Zagreb <.CRBEX 1584.85 1581.13 +0.24% -21.44% > .BELEX Belgrade <.BELEX 667.68 666.75 +0.14% -16.72% 15 15> .SOFIX Sofia <.SOFIX 433.57 434.56 -0.23% -23.69% > BONDS Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year <CZ2YT= 0.1130 0.0750 +081bp +7bps RR RR> s CZ5YT= 5-year <CZ5YT= 0.3490 -0.0060 +105bp -1bps RR RR> s CZ10YT <CZ10YT 0.8240 0.0100 +134bp +2bps =RR 10-year =RR> s Poland PL2YT= 2-year <PL2YT= 0.1270 -0.0070 +082bp -1bps RR RR> s PL5YT= 5-year <PL5YT= 0.6800 -0.0060 +138bp -1bps RR RR> s PL10YT <PL10YT 1.2940 -0.0050 +181bp +0bps =RR 10-year =RR> s FRA 3×6 6×9 9×12 3M interba nk Czech <CZKFRA 0.33 0.33 0.35 0.34 Rep ><PRIBO R=> Hungary <HUFFRA 0.62 0.60 0.60 0.60 ><BUBOR => Poland <PLNFRA 0.18 0.16 0.16 0.23 ><WIBOR => Note: FRA quotes are for ask prices ******************************************** ****************** (Reporting by Jason Hovet in Prague, editing by Larry King)

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