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CEE MARKETS-Crown hovers near 5-yr-high, forint eases ahead of rate meeting

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BUDAPEST, Jan 30 (Reuters) - The Czech crown gained modestly in early trade on Tuesdat, hovering near the previous session's five-year-high on the back of rate hike expectations.

The Hungarian forint edged to weaker levels ahead of Tuesday's central bank policy meeting.

The crown, the world's best-performing currency last year along with the Polish zloty , is bolstered by mounting expectations that the Czech central bank (CNB) would raise interest rates again this week after two hikes last year.

The bank was the first in Central Europe to start tightening policy in August 2017 to stem inflation pressures.

At 0922 GMT, the crown was 0.1 percent stronger at 25.325 per euro, compared with Monday's 5-year high at 25.281. The forint edged down 0.1 percent, skirting towards the 310 per euro mark.

While the CNB is widely expected to raise its main repo rate by 25 basis points to 0.75 percent on Thursday to fight inflation as the Czech economy powers ahead, Hungary's central bank is seen maintaining its ultra-dovish policy stance.

It is expected to keep its base rate on hold at a record low 0.9 percent , and also over the next two years according to a poll of analysts last week. The bank is also expected to keep its overnight deposit rate on hold at -0.15 percent at its meeting. "We do not rule out minor announcements regarding practical aspects of MNB's long-term yield capping programme, but major market-moving policy change is unlikely at this meeting," analysts at Commerzbank said in a note.

"It remains the case that MNB holds the loosest monetary stance among peer central banks within CEE, which leads us to forecast EUR-HUF trending upwards to the 317.00 mark by the end of this year."

The bank has been loosening policy via unconventional tools, most recently using a new interest rate swap provided for commercial banks in an effort to bring longer-term government bond yields lower.

The Polish zloty underperformed, easing 0.13 percent, failing to benefit from stronger-than-expected economic growth figures, which showed gross domestic product growing by 4.6 percent in 2017, above a 4.5 percent estimate. CEE SNAPSH AT

MARKETS OT 1022

CET

CURREN

CIES

Latest Previo Daily Change

us

bid close change in 2018 Czech <EURCZK 25.325 25.349 +0.09 +0.86% crown => 0 0 % Hungary <EURHUF 310.30 310.06 -0.08% +0.20% forint => 00 00 Polish <EURPLN 4.1485 4.1430 -0.13% +0.67% zloty => Romania <EURRON 4.6545 4.6525 -0.04% +0.54% n leu => Croatia <EURHRK 7.4200 7.4185 -0.02% +0.14% n kuna => Serbian <EURRSD 118.48 118.71 +0.19 +0.02% dinar => 00 00 % Note: calculated from 1800 daily CET change

Latest Previo Daily Change

us

close change in 2018 Prague 1129.3 1131.2 -0.17% +4.75%

5 300 Budapes 40276. 40500. -0.55% +2.28% t 44 12 Warsaw <.WIG20 2576.9 2593.4 -0.63% +4.70%

> 8 0 Buchare 8394.9 8423.9 -0.34% +8.27% st 2 1 Ljublja <.SBITO 832.05 835.27 -0.39% +3.18% na P> Zagreb <.CRBEX 1865.8 1870.4 -0.25% +1.24%

> 0 5 Belgrad <.BELEX 768.20 770.04 -0.24% +1.11% e 15> Sofia <.SOFIX 708.66 709.45 -0.11% +4.61%

>

BONDS

Yield Yield Spread Daily

(bid) change vs change

Bund in Czech spread Republi c

<CZ2YT= 0.5180 0.0440 +106b +5bps 2-year RR> ps

<CZ5YT= 1.1050 -0.002 +113b +0bps 5-year RR> 0 ps

<CZ10YT 1.8390 0.0400 +116b +6bps 10-year =RR> ps Poland

<PL2YT= 1.5350 -0.008 +208b +0bps 2-year RR> 0 ps

<PL5YT= 2.7240 -0.039 +275b -4bps 5-year RR> 0 ps

<PL10YT 3.4400 -0.042 +277b -3bps 10-year =RR> 0 ps

FORWARD RATE AGREEM

ENT

3x6 6x9 9x12 3M

interba

nk Czech <CZKFRA 1.02 1.20 1.36 #N/A Rep ><PRIBO Access

R=> Denied:

User

req to

PE(9762

) Hungary <HUFFRA 0.09 0.14 0.21 0.02

><BUBOR

=> Poland <PLNFRA 1.75 1.77 1.87 1.72

><WIBOR

=> Note: are for ask FRA prices quotes **************************************** ********************** (Reporting by Gergely Szakacs)

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