BUDAPEST, Oct 9 (Reuters) - Central European currencies firmed on Friday, with the Hungarian forint extending gains after a lower-than-expected September inflation reading took pressure off the central bank and the trade balance posted a sizeable surplus in August. While the decline in inflation temporarily relieves the National Bank of Hungary, which is battling inflation and deepening recession worries, risks in Central European and emerging markets are high as COVID-19 cases spike. "The slowing pace of recovery in CEE and the rising number of new COVID-19 cases will likely keep risks elevated," Morgan Stanley analysts said in a note. "While we think that the benign September inflation print will ease some of the pressure for the (Hungarian) central bank to deliver tighter monetary conditions, we think that it is too early for it to consider realigning the one-week depo rate to the base rate at 0.60%." The bank hiked the one-week depo rate by 15 basis points to 0.75% on Sept. 25, which helped shore up the weakening forint and reverse a negative trend. On Friday, the forint was up 0.1% at 357.20 to the euro, after it outperformed peers on Thursday. Hungary posted a foreign trade surplus of 251 million euros ($295.98 million) in August, above analyst forecasts for 140 million. The Czech crown was also 0.1% firmer, even though the Czech Republic's daily cases of the novel coronavirus rose to 5,394 on Thursday, the third record tally in a row. "Thursday was a bad day for the CZK rates, (on) the long end dropping by 6 bps on disappointing retail sales, a record number of new COVID-19 cases and tighter government restrictions announced in the afternoon," Komercni Banka trader Marek Lesko said in a morning note on Friday. The Czech government will tighten anti-coronavirus measures from next week, with new curbs on sports and cultural venues and restaurants as the country struggles with a surge of new cases, Health Minister Roman Prymula said on Thursday. nL8N2GZ4SK Stocks were mixed, with Bucharest's blue chip index firming 0.3% while Warsaw's and Budapest's weakened 1.5% and 0.7%, respectively. CEE SNAPSHOT AT MARKETS 0955 CET CURRENCIE S Latest Previous Daily Change bid close change in 2020 Czech 27.1600 27.1800 +0.07% -6.36% crown Hungary 357.2000 357.5000 +0.08% -7.29% forint Polish 4.4800 4.4900 +0.22% -4.99% zloty Romanian 4.8725 4.8735 +0.02% -1.73% leu Croatian 7.5670 7.5670 +0.00% -1.61% kuna Serbian 117.4600 117.5600 +0.09% +0.09% dinar Note: calculated from 1800 CET daily change Latest Previous Daily Change close change in 2020 Prague 875.41 874.6800 +0.08% -21.53% Budapest 33460.14 33697.94 -0.71% -27.39% Warsaw 1694.25 1719.91 -1.49% -21.20% Bucharest 8906.97 8875.47 +0.35% -10.73% Ljubljana 835.43 836.55 -0.13% -9.77% Zagreb 1614.80 1615.94 -0.07% -19.96% Belgrade <.BELEX15 692.04 691.75 +0.04% -13.68% > Sofia 421.98 421.65 +0.08% -25.73% Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=RR 0.0660 -0.0160 +077bps -2bps > 5-year <CZ5YT=RR 0.5780 -0.0130 +131bps -1bps > 10-year <CZ10YT=R 0.9310 -0.0380 +146bps -3bps R> Poland 2-year <PL2YT=RR 0.0240 -0.0100 +073bps -1bps > 5-year <PL5YT=RR 0.5580 -0.0060 +129bps +0bps > 10-year <PL10YT=R 1.3090 -0.0180 +184bps -1bps R> FORWARD 3x6 6x9 9x12 3M interban k Czech Rep < 0.29 0.29 0.34 0.35 PRIBOR=> Hungary < 0.89 0.91 0.95 0.76 BUBOR=> Poland < 0.19 0.19 0.19 0.22 WIBOR=> Note: FRA are for ask prices quotes *************************************************** *********** ($1 = 0.8480 euros) (Reporting by Krisztina Than; editing by Uttaresh.V)
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