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CEE MARKETS-Czech crown firms on expectations of August rate hike

    BUCHAREST, July 13 (Reuters) - The Czech crown
touched a one-week high on Tuesday as inflation exceeded market
expectations and reinforced views of another interest rate hike
in August, while other central and eastern European currencies
were mixed.
    Czech headline inflation eased less than expected in June to
a rate of 2.8% year-on-year, sticking near the top end of the
central bank's target range.
    "The Czech National Bank has open space for another rate
rise already at its August meeting after today's data,"
UniCredit economist Patrik Rozumbersky said.
    In June, the Czech and Hungarian central banks became the
European Union's first policymakers to tighten interest rates
since the pandemic hit, faced with strong inflationary
pressures.
    By 0850 GMT, the Czech crown was up 0.3% against
the euro on the day at 25.6140.
    Elsewhere in the region, the Romanian leu was flat
against the euro despite inflation rising to a
higher-than-expected 3.94%.
    Earlier this month, Romanian central bank Governor Mugur
Isarescu said the bank did not plan to hike its benchmark
interest rate at its August meeting, but that it had already
started a tighter control of market liquidity.
    Analysts did not expect the bank to hike borrowing costs
this year, as Romania's benchmark rate - while at a record low -
was still higher compared to its regional peers.
    "So far, the central bank reaction to higher inflation has
been relatively limited, which we expect to be the case for the
rest of 2021," said ING Bank Romania chief economist Valentin
Tataru.
    "Should inflation be more demand-driven earlier than
currently expected, we might see rate hikes starting as soon as
4Q20."
    The Hungarian forint and Polish zloty
were each down 0.2% on the day.
    Stocks in the region were mixed, with Warsaw up
0.8%, Budapest up 0.2%, Prague down 0.2% and
Bucharest flat.
    
           CEE       SNAPSHO   AT                      
           MARKETS   T        1117              
                              CET               
                     CURRENC                           
                     IES                        
                     Latest   Previou  Daily    Change
                              s                 
                     bid      close    change   in 2021
 Czech     <EURCZK=  25.6590  25.6900   +0.12%   +2.22%
 crown     >                                    
 Hungary   <EURHUF=  356.400  355.800   -0.17%   +1.77%
 forint    >               0        0           
 Polish    <EURPLN=   4.5658   4.5550   -0.24%   -0.14%
 zloty     >                                    
 Romanian  <EURRON=   4.9285   4.9270   -0.03%   -1.29%
 leu       >                                    
 Croatian  <EURHRK=   7.4898   7.4940   +0.06%   +0.77%
 kuna      >                                    
 Serbian   <EURRSD=  117.520  117.530   +0.01%   +0.04%
 dinar     >               0        0           
 Note:     calculated from             1800            
 daily                                 CET      
 change Latest   Previou  Daily    Change
                              s                 
                              close    change   in 2021
 Prague              1156.88  1159.44   -0.22%   +12.63
                                   00                 %
 Budapest            47987.7  47804.2   +0.38%   +13.96
                           7        6                 %
 Warsaw              2276.20  2255.48   +0.92%   +14.73
                                                      %
 Buchares            11960.8  11967.8   -0.06%   +21.98
 t                         6        0                 %
 Ljubljan  <.SBITOP  1139.08  1133.50   +0.49%   +26.45
 a         >                                          %
 Zagreb              1952.21  1958.38   -0.32%   +12.24
                                                      %
 Belgrade  <.BELEX1   771.41   773.56   -0.28%   +3.05%
           5>                                   
 Sofia                565.69   563.91   +0.32%   +26.40
                                                      %
                                                       
                     Yield    Yield    Spread   Daily
                     (bid)    change   vs Bund  change
                                                in
 Czech                                          spread
 Republic                                       
   2-year  <CZ2YT=R   0.4320  -0.0340   +110bp    -3bps
           R>                                s  
   5-year  <CZ5YT=R   1.6620   0.0200   +226bp    +2bps
           R>                                s  
           <CZ10YT=   1.7940   0.0040   +209bp    +0bps
 10-year   RR>                               s  
 Poland                                                
   2-year  <PL2YT=R   0.4410   0.0580   +111bp    +6bps
           R>                                s  
   5-year  <PL5YT=R   1.2580  -0.0280   +186bp    -3bps
           R>                                s  
           <PL10YT=   1.6880  -0.0150   +199bp    -2bps
 10-year   RR>                               s  
           FORWARD                                     
                     3x6      6x9      9x12     3M
                                                interba
                                                nk
 Czech                  1.07     1.37     1.60     0.67
 Rep       <PRIBOR=                             
           >                                    
 Hungary                1.68     2.03     2.21     1.07
                                                
 Poland                 0.28     0.41     0.58     0.21
                                                
 Note:     are for ask                                 
 FRA       prices                               
 quotes                                         
 *********************************************         
 *****************                              
 
 (Reporting by Luiza Ilie in Bucharest, Jason Hovet in Prague,
Alan Charlish in Warsaw and Anita Komuves in Budapest; Editing
by Amy Caren Daniel)
  
 
 
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