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CEE MARKETS-Inflation drives Czech crown to post cap high
June 9, 2017 / 8:43 AM / 3 months ago

CEE MARKETS-Inflation drives Czech crown to post cap high

    By Krisztina  Than and Jason Hovet
    BUDAPEST/PRAGUE, June 9 (Reuters) - The Czech crown hit its
highest level since the central bank removed its cap on the
currency in April, boosted on Friday by higher than expected May
inflation data which pointed to possible monetary tightening
later this year. 
    Among other currencies the forint and the Romanian
leu were up 0.1 percent and the zloty flat,
with Central European markets showing no significant reaction to
the unexpected outcome of Britain's elections.
    The crown led gains on Thursday, hitting its
highest level since 2013, after Czech central bankers repeated
that they could start raising interest rates this year, in
contrast with dovish policies elsewhere in the region. 
    On Friday the crown gained 0.4 percent versus the euro after
breaking a resistance level of 26.30 to trade at 26.20.
    Czech year-on-year inflation came in above market forecasts
at 2.4 percent in May, although this was below the central
bank's own prediction of 2.6 percent. The bank targets inflation
at 2 percent.
    "The CNB has to some degree a free hand. Its own outlook
argues for growth in rates in the second half of the year,"
Radomir Jac, chief economist for Generali Investments CEE, said,
adding that the central bank did not need to hurry to hike.
    "Raising rates by the end of this year cannot be ruled out.
But I see a number of arguments for stable rates this year and
the first rise in the spring of 2018," Jac said.
    The CNB has also said that the more the crown firms from its
former cap at 27 against the euro, the less the need for
tightening monetary policy.
    An increase in Czech rates -- which stand at a technical
zero -- would be the first in about a decade.  
    Shares in Kofola jumped 8 percent after its
founders and majority owners said they would raise their stake
in the Czech soft drinks maker to 68 percent in a series of
transactions that will see a big private equity investor exit. 
    The company also launched a tender offer for up to 5 percent
of shares. 
    The Polish and Czech stock markets gained in early trade,
while Budapest stocks was 0.4 percent lower by 0800 GMT.

                             CURRENCIES                         
                             Latest     Previ  Daily     Change
                                        ous              
                             bid        close  change    in 2017
 Czech crown                   26.2050  26.30    +0.39%    3.06%
                                           60            
 Hungary forint               307.8000  308.1    +0.12%    0.33%
                                          700            
 Polish zloty                   4.1975  4.197    +0.00%    4.92%
                                            6            
 Romanian leu                   4.5640  4.567    +0.08%   -0.64%
                                            8            
 Croatian kuna                  7.4160  7.421    +0.07%    1.88%
                                            0            
 Serbian dinar                122.5100  122.5    +0.07%    0.69%
                                          900            
 Note: daily     calculated  previous   close  1800 CET         
 change          from                   at               
                             STOCKS                             
                             Latest     Previ  Daily     Change
                                        ous              
                                        close  change    in 2017
 Prague                        1010.84  1006.    +0.46%   +9.68%
                                           22            
 Budapest                     35302.06  35270    +0.09%   +10.31
                                          .95                  %
 Warsaw                        2348.00  2340.    +0.33%   +20.54
                                           23                  %
 Bucharest                     8597.10  8673.    -0.88%   +21.34
                                           56                  %
 Ljubljana                      787.10  790.2    -0.39%   +9.69%
                                            2            
 Zagreb                        1818.73  1828.    -0.55%   -8.83%
                                           78            
 Belgrade                         0.00  718.9    +0.00%  -100.00
                                            6                  %
 Sofia                          677.26  677.3    -0.02%   +15.49
                                            9                  %
                 FORWARD     RATE       AGREEMENT               
                             3x6        6x9    9x12      3M
                                                         interba
                                                         nk
 Czech Rep               <P       0.34   0.42      0.49        0
                 RIBOR=>                                 
 Hungary                 <B       0.19   0.23      0.29     0.15
                 UBOR=>                                  
 Poland                  <W      1.754  1.767     1.792     1.73
                 IBOR=>                                  
 Note: FRA       are for                                        
 quotes          ask prices                              
 **************************************************************
 

 (Writing by Krisztina Than; Editing by Alexander Smith)
  
 
 

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