BUCHAREST, Oct 8 (Reuters) - The Hungarian forint outperformed its central European peers on Thursday as headline inflation slowed more than expected in September, while stocks across the region were mixed. Headline inflation slowed to an annual 3.4% in September, below a 3.9% forecast, data showed, providing relief to the central bank, which faces the challenge of rising inflation at a time when the COVID-19 pandemic has plunged the economy into recession. By 0910 GMT, the forint firmed 0.3% versus the euro at 357.8700. "This is a positive surprise, which made the forint strengthen immediately," a Budapest-based FX trader said. "The central bank got some breathing space, but investors are also watching events in the U.S. and coronavirus statistics." The bank unexpectedly raised the interest rate on its one-week deposit facility by 15 basis points to 0.75% on Sept. 25, which helped buoy the weakening forint. It last used the one-week deposit rate to support the currency on April 1, when it plunged to all-time lows of near 370 versus the euro during the first wave of the pandemic. Elsewhere in the region, the Czech crown was down 0.2% against the euro at 27.1250 as the European Union state reported 5,335 new coronavirus cases on Wednesday, its highest one-day tally since the pandemic started. Czech retail sales were flat year-on-year in August, against market expectations of a rise. "As the curve of new COVID cases has not flattened yet, we do not expect the koruna to outperform EMFX," Citibank said in a research note. "Hence, we expect the crown to remain around spot levels in the near-term before reaching stronger levels once the local epidemic situation, EURUSD, US election outcome and COVID vaccine make it achievable." The Polish zloty was 0.3% weaker on the day. The Polish central bank left its benchmark interest rate unchanged at a record low of 0.1% on Wednesday, as expected. The bank said economic recovery may slow in coming months, and could be limited by the lack of visible and more durable zloty exchange rate adjustment to the global pandemic-driven shock and its monetary policy easing. Stocks were mixed, with Bucharest's blue chip index firming 0.5% while Warsaw's and Budapest's weakened 0.5% and 0.4%, respectively. CEE SNAPSHO AT MARKETS T 1139 CET CURRENC IES Latest Previou Daily Change s bid close change in 2020 Czech <EURCZK= 27.1250 27.0850 -0.15% -6.24% crown > Hungary <EURHUF= 357.750 358.890 +0.32% -7.44% forint > 0 0 Polish <EURPLN= 4.4890 4.4785 -0.23% -5.18% zloty > Romanian <EURRON= 4.8745 4.8755 +0.02% -1.77% leu > Croatian <EURHRK= 7.5670 7.5675 +0.01% -1.61% kuna > Serbian <EURRSD= 117.460 117.560 +0.09% +0.09% dinar > 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2020 Prague 872.93 873.180 -0.03% -21.75% 0 Budapest 33428.0 33561.0 -0.40% -27.46% 7 5 Warsaw 1728.43 1736.61 -0.47% -19.61% Buchares 8916.83 8869.71 +0.53% -10.63% t Ljubljan <.SBITOP 837.99 837.57 +0.05% -9.49% a > Zagreb 1613.94 1611.53 +0.15% -20.00% Belgrade <.BELEX1 693.43 695.46 -0.29% -13.50% 5> Sofia 423.39 422.00 +0.33% -25.48% Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic 2-year <CZ2YT=R 0.0970 -0.0230 +079bp -2bps R> s 5-year <CZ5YT=R 0.5390 -0.0600 +124bp -5bps R> s <CZ10YT= 0.9310 -0.0320 +144bp -2bps 10-year RR> s Poland 2-year <PL2YT=R 0.0100 -0.0370 +071bp -3bps R> s 5-year <PL5YT=R 0.5840 -0.0020 +129bp +1bps R> s <PL10YT= 1.3300 -0.0160 +184bp +0bps 10-year RR> s FORWARD 3x6 6x9 9x12 3M interba nk Czech 0.31 0.31 0.35 0.35 Rep <PRIBOR= > Hungary 0.97 1.01 1.04 0.76 Poland 0.21 0.21 0.22 0.22 Note: are for ask FRA prices quotes ********************************************* ***************** (Reporting by Luiza Ilie in Bucharest, Anita Komuves in Budapest, Alan Charlish in Warsaw, Jason Hovet and Robert Muller in Prague; Editing by Subhranshu Sahu)
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