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CEE MARKETS-Forint snaps win streak as CEE drifts lower

    PRAGUE, Sept 10 (Reuters) - Hungary's forint snapped a
three-day rally on Thursday, leading central Europe's currencies
lower after the central bank signalled a slower economic
recovery from the coronavirus pandemic.
    The Polish zloty also paused a slight rebound seen this week
after it touched a six-week low last Friday while the Czech
crown continue to drift lower, with a test of another important
technical level in sight.
    Stock markets also mostly slipped as Warsaw had
lost 0.9% by 0855 GMT and Budapest was down 0.7%
    Hungarian bank OTP fell more than 1% when the
country's central bank called on commercial banks to extend a
suspension of dividend payments until Jan. 1, 2021.
    Central bank Deputy Governor Barnabas Virag said on Thursday
Hungary's recovery from the coronavirus pandemic would be more
protracted than previously expected.
    The forint was down 0.2% mid-morning at 357.40 to
the euro, giving up gains from the previous session when the
central bank launched swap tenders for foreign currency
liquidity.
    The zloty also lost 0.2% while the crown
was off 0.1% and unmoved by August inflation on Thursday that
showed price growth above the central bank's tolerance band
around its 2% target for a third straight month.
    The Czech bank has signalled it is keen to keep its key rate
at 0.25% going ahead and was ready to tolerate elevated
inflation.
    Hungary has also seen inflation spike, putting its central
bank in a tough spot as it keeps policy loose amid the pandemic.
    Commerzbank analysts said higher inflation could be negative
for the forint as it was unlikely to get a hawkish reaction.
    "We really doubt that the MPC can achieve consensus to stay
ahead of the curve when the time really comes to normalise
rates," it said.
    "If the central bank is not going to respond to higher
inflation with higher rates, then the effect of higher inflation
on the exchange rate is negative, not positive."
    
                              CEE      SNAPSHO   AT                      
                              MARKETS  T        1055              
                                                CET CURRENC                                    
                              IES                                 
                                       Latest   Previou  Daily    Change
                                                s                 
                                       bid      close    change   in 2020
 EURCZK  Czech crown          <EURCZK  26.5550  26.5215   -0.13%   -4.23%
 =                            =>                                  
 EURHUF  Hungary forint       <EURHUF  357.400  356.670   -0.20%   -7.35%
 =                            =>             0        0           
 EURPLN  Polish zloty         <EURPLN   4.4502   4.4397   -0.24%   -4.35%
 =                            =>                                  
 EURRON  Romanian leu         <EURRON   4.8580   4.8585   +0.01%   -1.43%
 =                            =>                                  
 EURHRK  Croatian kuna        <EURHRK   7.5350   7.5315   -0.05%   -1.19%
 =                            =>                                  
 EURRSD  Serbian dinar        <EURRSD  117.480  117.580   +0.09%   +0.08%
 =                            =>             0        0           
         Note: daily change   calculated from            1800            
                                                         CET STOCKS                                     
                                       Latest   Previou  Daily    Change
                                                s                 
                                                close    change   in 2020
 .PX     Prague                         901.36  900.680   +0.08%  -19.21%
                                                      0           
 .BUX    Budapest                      34896.9  35142.7   -0.70%  -24.27%
                                             4        4           
 .WIG20  Warsaw               <.WIG20  1758.07  1773.37   -0.86%  -18.23%
                              >                                   
 .BETI   Bucharest                     9131.90  9082.08   +0.55%   -8.47%
 .SBITO  Ljubljana            <.SBITO   848.99   849.40   -0.05%   -8.30%
 P                            P>                                  
 .CRBEX  Zagreb               <.CRBEX  1606.19  1605.17   +0.06%  -20.38%
                              >                                   
 .BELEX  Belgrade             <.BELEX   687.45   690.10   -0.38%  -14.25%
 15                           15>                                 
 .SOFIX  Sofia                <.SOFIX   433.26   435.07   -0.42%  -23.74%
                              > BONDS                                      
                                       Yield    Yield    Spread   Daily
                                       (bid)    change   vs Bund  change
                                                                  in
         Czech Republic                                           spread
 CZ2YT=    2-year             <CZ2YT=   0.1710  -0.0320   +086bp    -3bps
 RR                           RR>                              s  
 CZ5YT=    5-year             <CZ5YT=   0.6610  -0.0670   +134bp    -6bps
 RR                           RR>                              s  
 CZ10YT    10-year            <CZ10YT   1.0680  -0.0560   +154bp    -5bps
 =RR                          =RR>                             s  
         Poland                                                          
 PL2YT=    2-year             <PL2YT=   0.0830   0.0050   +077bp    +1bps
 RR                           RR>                              s  
 PL5YT=    5-year             <PL5YT=   0.6950  -0.0250   +138bp    -2bps
 RR                           RR>                              s  
 PL10YT    10-year            <PL10YT   1.3730  -0.0200   +184bp    -1bps
 =RR                          =RR>                             s FRA                                        
                                       3x6      6x9      9x12     3M
                                                                  interba
                                                                  nk
         Czech Rep            <CZKFRA     0.37     0.38     0.42     0.34
                              ><PRIBO                             
                              R=>                                 
         Hungary              <HUFFRA     0.79     0.86     0.92     0.63
                              ><BUBOR                             
                              =>                                  
         Poland               <PLNFRA     0.19     0.20     0.21     0.23
                              ><WIBOR                             
                              =>                                  
         Note: FRA quotes are for ask prices                             
         *******************************************************         
         ******* (Reporting by Jason Hovet in Prague and Anita Komuves in
Budapest; Editing by Toby Chopra)
  
 
 
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