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CEE MARKETS-Czech crown firms on strongest wage data since 2008
June 5, 2017 / 9:21 AM / 6 months ago

CEE MARKETS-Czech crown firms on strongest wage data since 2008

    * Crown briefly breaks through 26.30 to euro
    * Czech wage data strongest since 2008
    * Prague bourse sees technical glitch, Warsaw down
    * Many markets closed for holiday

    PRAGUE, June 5 (Reuters) - The Czech crown rose to its
highest level since the central bank abandoned a cap on the
currency in April, with data showing the country's fastest wage
growth since 2008 pointing to potential interest rate hikes
later this year.
    There was no immediate reaction on the Prague stock exchange
on Monday as a technical glitch prevented any trading. The
bourse was due to restart at 1200 CET (1000 GMT).
    Warsaw did open, unlike other European markets which were
closed for a public holiday, with the blue-chip index falling
0.7 percent by 0830 GMT.
    The Czech crown climbed 0.2 percent to 26.293 against the
euro but only traded briefly beyond 26.300, a level which has
provided resistance in recent days.
    The crown has gained 2.7 percent since the central bank
released it from a currency cap, showing only gradual gains as
investors wait for a bigger payday after betting tens of
billions on a jump in the currency once it was free.
    The currency will play a key role in how soon the central
bank will begin to raise interest rates, likely becoming the
first in central Europe to do so after years of loose policy. 
    Governor Jiri Rusnok said last week that there was no rush
towards tightening. The last Reuters poll saw the first rate
rise next year, although the central bank's forecasts point to
raising rates in the second half.
    Czech rates have been near zero since 2012 while the central
bank had kept the crown artificially weak since 2013.
    A Reuters analyst poll last week saw the crown heading to
25.75 to the euro in the next 12 months but in a range between
26.2 and 27 until the end of September.
    If the crown failed to show sufficient appreciation, it
could lead central bankers to begin tightening rates sooner than
many expect. However, steady firming would allow them to wait.
    "The stated wage growth was 0.5 percentage points above the
central bank's forecast, making it a point in favour of
tightening monetary policy," Radomir Jac, Generali Investments
CEE chief economist, said.
    "This point is, however, currently neutralised by lower than
expected inflation and strengthening of the crown," Jac said.
                    CEE MARKETS        SNAPSHOT    AT  1053 CET                 
                                       Latest     Previous  Daily      Change
                                       bid        close     change     in 2017
 Czech crown                             26.2930   26.3555     +0.24%      2.72%
 Hungary forint                         307.6700  307.7450     +0.02%      0.37%
 Polish zloty                             4.1782    4.1864     +0.20%      5.40%
 Romanian leu                             0.0000    4.5666   #DIV/0!    #DIV/0!
 Croatian kuna                            7.4080    7.4095     +0.02%      1.99%
 Serbian dinar                          122.1900  122.4500     +0.21%      0.95%
 Note: daily        calculated from    previous   close at  1800 CET            
                                       Latest     Previous  Daily      Change
                                                  close     change     in 2017
 Prague                                       --   1005.81     +0.00%   -100.00%
 Budapest                                     --  34762.46     +1.12%     +9.83%
 Warsaw                                  2287.23   2303.21     -0.69%    +17.42%
 Bucharest                                    --   8688.50     +0.93%    +23.77%
                                       Yield      Yield     Spread     Daily
                                       (bid)      change    vs Bund    change in
 Czech Republic                                                        spread
   2-year                                 -0.132     0.052    +057bps      +3bps
   5-year                                  -0.16     0.037    +026bps      +1bps
   10-year                                 0.681    -0.023    +039bps      -4bps
   2-year                                  1.888    -0.014    +259bps      -3bps
   5-year                                  2.618    -0.018    +304bps      -5bps
   10-year                                  3.17    -0.003    +288bps      -2bps
                    FORWARD            RATE       AGREEMENT                     
                                       3x6        6x9       9x12       3M
 Czech Rep                                  0.34      0.41       0.48          0
 Hungary                                   0.195     0.255      0.345       0.15
 Poland                                     1.77      1.77        1.8       1.73
 Note: FRA quotes   are for ask                                                 
 (Writing by Jason Hovet in Prague; editing by Alexander Smith)

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