CEE MARKETS-CEE currencies strengthen even as business activity stays weak

By Boldizsar Gyori Budapest, May 2 (Reuters) - Central and Eastern European currencies gained on Tuesday despite data showing business activity contracted further in Poland and the Czech Republic in April. Czech manufacturing activity shrank in April at its fastest pace so far this year, with the headline Purchasing Managers' Index (PMI) falling to 42.8 from 44.3 in March, further below the 50 mark that divides expansion from contraction and indicating a weak start to the second quarter. Gross domestic product in the Czech Republic inched up 0.1% quarter-on-quarter, preliminary data showed, likely pulling the economy out of recession, with trade driving the slight expansion. The crown was up 0.15% by 0915 GMT, at 23.56 to the euro. Poland' PMI meanwhile fell to 46.6 from 48.3 in March, accelerating a contraction as a sharp decline in new orders led firms to cut production and jobs. Input prices fell for the first time in seven years, with respondents reporting that they were paying lower prices for a range of raw materials. Output declined for a twelfth consecutive month. "The overall picture of industry is therefore not optimistic, both in terms of domestic and export demand. This seems to be confirmed by industrial economic indicators from large European economies or China," said ING Bank Slaski. Governor of the National Bank of Poland Adam Glapinski, in an interview with Gazeta Polska weekly, said he hoped a first interest rate cut would be possible at the end of the year, but it would depend on how much inflation eases.

Poland's main interest rate has been 6.75% since September, while inflation fell to 14.7% in April from 16.1% in March, according to a flash estimate from the statistics office, still way above the NBP's 1.5% to 3.5% target. Poland's zloty was up 0.29% at 4.5925 to the euro. Hungary's forint firmed after a long weekend, with the country's PMI rising to 61.9 in April from a revised 56 in March. That was above both the long-term monthly average of 52.2 and an average reading of 56.1 in the same month of the past three years. The forint was steady at 371.8 to the euro having strengthed earlier.

The National Bank of Hungary slashed the top of its interest rate corridor by 450 basis points to 20.5% on April 25 and said any change to its key 18% rate in coming months would depend on risk assessment. Inflation surged to double-digit rates across central Europe but looks to have peaked. Interest rates remain elevated and central banks are not in a hurry to ease policy until price growth is under control.

BUDAPEST, May 2 (Reuters) -

CEE SNAPSHO AT

MARKETS T 1115

CET

CURRENC

IES

Latest Previou Daily Change s

bid close change in 2023 EURCZK Czech <EURCZK 23.5600 23.5950 +0.15% +2.54% = crown =>
EURHUF Hungary <EURHUF 371.800 371.800 +0.00% +7.43% = forint => 0 0
EURPLN Polish <EURPLN 4.5925 4.6060 +0.29% +2.11% = zloty =>
EURRON Romanian <EURRON 4.9295 4.9245 -0.10% +0.26% = leu =>
EURRSD Serbian <EURRSD 117.150 117.270 +0.10% +0.13% = dinar => 0 0

Note: calculated from 1800

daily CET

change

Latest Previou Daily Change s

close change in 2023 .PX Prague 1380.29 1378.05 +0.16% +14.86 00 % .BUX Budapest 45441.2 44822.2 +1.38% +3.76% 8 1
.WIG20 Warsaw <.WIG20 1929.79 1923.09 +0.35% +7.69% >
.BETI Buchares 12384.0 12267.5 +0.95% +6.18% t 7 9
.SBITO Ljubljan <.SBITO 1229.81 1229.41 +0.03% +17.26 P a P> % .CRBEX Zagreb <.CRBEX 2235.19 2230.85 +0.19% +750.6 > 3% .BELEX Belgrade <.BELEX 904.49 904.49 +0.00% +9.69% 15 15>
.SOFIX Sofia <.SOFIX 609.62 607.01 +0.43% +1.35% >

Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic
CZ2YT= 2-year <CZ2YT= 5.6490 -0.4740 +287bp -53bps RR RR> s
CZ5YT= 5-year <CZ5YT= 4.9060 0.0170 +255bp -3bps RR RR> s
CZ10YT <CZ10YT 4.5430 -0.0140 +218bp -5bps =RR 10-year =RR> s

Poland
PL2YT= 2-year <PL2YT= 5.8600 -0.1200 +308bp -17bps RR RR> s
PL5YT= 5-year <PL5YT= 5.8760 -0.0220 +352bp -7bps RR RR> s
PL10YT <PL10YT 5.8880 -0.0210 +353bp -6bps =RR 10-year =RR> s

FORWARD

3x6 6x9 9x12 3M interba nk Czech <CZKFRA 7.17 6.67 6.01 7.18 Rep ><PRIBO

R=>

Hungary <HUFFRA 14.60 12.53 11.08 16.23 ><BUBOR

=>

Poland <PLNFRA 6.80 6.52 6.13 6.90 ><WIBOR

=>

Note: are for ask

FRA prices

quotes

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(Reporting by Boldizsár Gyori in Budapest and Jason Hovet in Prague; Editing by Kirsten Donovan)

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