CEE MARKETS-Crown surges as Czech CPI rise fuel rate hike expectation

* Crown jumps after Oct CPI comes in higher than expected

* Czech CPI rise underpins central bank rate hike expectation

* Hungary's CPI lower than forecast, forint sets one-month low

* Leu steady ahead of new central bank economic forecasts

BUDAPEST, Nov 9 (Reuters) - The Czech crown surged towards 4-year highs against the euro on Thursday after fresh Czech figures showed that annual inflation rose even more above the central bank's (CNB) 2 percent target. Hungary's forint, meanwhile, eased to a one-month low as October inflation was lower than expected, underpinning the Hungarian central bank's monetary loosening policy. Czech inflation rose to 2.9 percent in October from 2.7 percent in September, above analysts' 2.8 percent forecast. Hungary's inflation retreated to 2.2 percent from 2.5 percent, below analysts' 2.3 percent projection. The Czech crown firmed 0.3 percent to 25.53 against the euro by 0812 GMT. The forint traded at 312.15, off the day's low of 312.44, but still weaker by 0.1 percent from Wednesday. A Reuters poll of analysts showed on Thursday that the crown could lead a firming of currencies in the European Union's eastern wing in the next year, helped by the CNB's tightening of monetary conditions. The bank has increased interest rates twice since August to fight inflation. "With this (inflation) number, the pressure for breaking through the 25.500 level will grow," one Prague-based dealer said. " "We will see if it gets there but if it does, we could move to a range of some 25.20-25.50 for the next cople of months," the dealer said, adding that another rate hike may come in December. The Hungarian central bank has pumped forint liquidity into interbank markets to ease monetary conditions and had pledged further measures to push long-term government bond yields and mortgage interest rates lower. "Since yesterday, Hungary's 10-year bond yield is steadily below the 10-year U.S. Treasury," Takarekbank analysts said in a note. "Even in light of Fed rate hikes, this indicates the recent significant fall in the Hungarian economy's risk level." The dinar was firmer by 0.1 percent at 118.72 against the euro ahead of the Serbian central bank's meeting. It is expected to keep the region's highest benchmark central bank rate of 3.5 percent on hold, after two surprise cuts in as many months. The leu was steady at 4.6285 against the euro, trading near its weakest levels in more than 5 years, ahead of a news conference where Romanian central bank Governor Mugur Isarescu is due to present the bank's new economic forecasts. The Romanian currency fell on Tuesday after investors interpreted Isarescu's comments after a rate-setting meeting of the bank as favouring a looser grip on the exchange rate.

Fresh figures showed a widening of Romania's trade deficit in the January-September period, adding to signs that the robustly growing economy may face overheating risks. Romania also faces political risks. The government on Wednesday approved a tax overhaul via emergency decree , despite criticism from investors, trade unions and the country's president.



Latest Previo Daily Change


bid close change in


Czech crown 25.530 25.598 +0.27 5.79% 0 0 % Hungary 312.15 311.96 -0.06% -1.07% forint 00 00 Polish zloty 4.2361 4.2353 -0.02% 3.96% Romanian leu 4.6285 4.6285 +0.00 -2.02%


Croatian 7.5360 7.5403 +0.06 0.25% kuna % Serbian 118.72 118.85 +0.11 3.90% dinar 00 00 % Note: daily calculated previo close 1800 change from us at CET


Latest Previo Daily Change


close change in


Prague 1056.6 1054.0 +0.24 +14.6 3 7 % 5% Budapest 40429. 40122. +0.77 +26.3 71 07 % 3% Warsaw 2513.3 2513.3 -0.01% +29.0 8 4 3% Bucharest 7790.7 7777.2 +0.17 +9.96 7 7 % % Ljubljana 0.00 792.07 +0.00 -100.0 % 0% Zagreb 0.00 1839.3 +0.00 -100.0 9 % 0% Belgrade 0.00 730.57 +0.00 -100.0 % 0% Sofia 672.49 672.49 +0.00 +14.6 % 8%


Yield Yield Spread Daily (bid) change vs change Bund in Czech spread


2-year 0.312 0 +108b +1bps


5-year 0.721 0.003 +110b +0bps


10-year 1.592 0 +127b +0bps

ps Poland

2-year 1.599 -0.001 +236b +1bps


5-year 2.647 0.012 +303b +1bps


10-year 3.405 0.009 +308b +1bps



interb ank

Czech Rep <PR 0.91 1.04 1.17 0


Hungary <BU 0.08 0.09 0.13 0.03


Poland <WI 1.77 1.815 1.915 1.73


Note: FRA are for ask quotes prices ********************************************************* *****

(Additional reporting by Jan Lopatka in Prague)