CEE MARKETS-Czech crown leads currencies lower as virus cases spike, shops close

By Krisztina Than BUDAPEST, October 22 (Reuters). Central European currencies expanded their losses on Thursday, with the Czech koruna dropping the worst against the euro, up 0.4% after the government ordered most stores to close and tighten restrictions to help stem the spread of the coronavirus. With the second wave of the pandemic hit the Czech Republic particularly hard, with a record of nearly 15,000 new infections in one day reported on Thursday, investors will be keeping an eye on the Czech central bank, which is expected to ease policies to support the economy. Global sentiment was undermined by the lack of clear progress in the US economic negotiations ahead of the November 3rd US presidential and congressional elections. "It can be assumed with some certainty that the decline in (Czech) GDP will be more pronounced in the fourth quarter. How pronounced it is is currently difficult to say," said Commerzbank in a note, adding that The situation is "extremely fragile". "The CNB could do that. The bank has always insisted that it would only consider easing monetary policy further if the economy collapsed significantly." The industry association estimated that the new restrictions will deepen the estimated economic decline for the full year by 2 to 4 percentage points to a decline of 10 to 12%. The Czech koruna fell 0.4% against the euro to 27.295. The Polish zloty and the Hungarian forint weakened by 0.3%. Hungary also reported a new record on the daily infection list, which rose to 2,032 on Thursday as the country increased tests. The region's currencies have come under pressure from a surge in new coronavirus cases and looming new economic restrictions. The Hungarian government will hold a weekly press conference at 08:30 GMT to assess the situation. The Hungarian central bank will offer a weekly deposit facility and the rate will be announced at 0950 GMT. The bank sets the interest rate every week. The bank has announced that it will use the weekly deposit rate to combat inflation risks stemming from the volatile global sentiment that has weighed on emerging market assets, including the forint. The interest rate is currently 0.75% above the reference rate of 0.6%. Most of the equity markets in the region opened lower but moved back into positive territory. Warsaw's shares were up 0.1%. Prague stocks fell 0.4% and the Budapest blue chip index rose 0.2% to 0805 GMT. CEE SNAPSHO IN THE MARKETS T 0939 CET CURRENC IES Latest Previou Daily Change s bid closing change in 2020 EURCZK Czech <EURCZK 27.2950 27.1930 -0.37% -6.83% = Krone => EURHUF Hungary <EURHUF 364.800 363.600 -0.33% = for -9.23% > 0 0 EURPLN Polish <EURPLN 4.5840 4.5705 -0.29% -7.15% = zloty => EURRON Romanian <EURRON 4.8750 4.8741 -0.02% -1.78% = leu = > EURHRK Croatian <EURHRK 7.5780 7.5735 -0.06% -1.75% = kuna => EURRSD Serbian <EURRSD 117,500 117,600 + 0.09% + 0.06% = dinars => 0 0 Note: calculated from 1800 daily CET change Last change of the last daily changes in 2020. PX Prague 853.86 857.710 -0.45% -23.46% 0 .BUX Budapest 33628.4 33696.7 -0.20% -27.03% 6 3 .WIG20 Warsaw < .WIG20 1643.88 1641.42 + 0.15% -23.54%> .BETI Buchares 8816.30 8804.34 + 0.14% -11.64% t .SBITO Ljubljan <.SBITO 826.47 829.01. 10.73% P a P> .CRBEX Zagreb <.CRBEX 1597.62 1598.66 -0.07% -20.81%> .BELEX Belgrade <.BELEX 689.13 689.13 + 0.00% -14 , 04% 15 15> .SOFIX Sofia <.SOFIX 427.71 428.00 -0.07% - 24.72%> Yield Yield Spread Daily (bid) change compared to Bund change in the Czech spread republic CZ2YT = 2 years <CZ2YT = 0.0930 -0.0090 + 087 bp -1 bps RR RR> s CZ5YT = 5 years <CZ5YT = 0.5930 -0.0050 + 138 bp + 0 bps RR RR> s CZ10YT <CZ10YT 1.0270 -0.0080 + 162 bp -1 bps = RR 10 years = RR> s Poland PL2YT = 2 years <PL2YT = -0.0330 -0.0340 + 074 bp -3 bps RR RR> s PL5YT = 5 years <PL5YT = 0.5150 0, 0020 + 131 bp + 0 bps RR RR> s PL10YT <PL10YT 1.2780 0.0020 + 187 bp + 1 bps = RR 10 years = RR> s FORWARD 3x6 6x9 9x12 3M interba nk Czech <CZKFRA 0.29 0.26 0.29 0.35 Rep> <PRIBO R => Hungary <HUFFRA 0.94 0.97 0.99 0.77> <BUBOR => Poland <PLNFRA 0.19 0.16 0.16 0.22> < WIBOR => Note: For FRA price information ****************** *********************** ************************ (Adaptation by William Mac lean)

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