BUDAPEST, Oct 9 (Reuters)Central European currencies firmed on Friday, with the Hungarian forint extending gains after a lower-than-expected September inflation reading took pressure off the central bank and the trade balance posted a sizeable surplus in August.

While the decline in inflation temporarily relieves the National Bank of Hungary, which is battling inflation and deepening recession worries, risks in Central European and emerging markets are high as COVID-19 cases spike.

“The slowing pace of recovery in CEE and the rising number of new COVID-19 cases will likely keep risks elevated,” Morgan Stanley analysts said in a note.

“While we think that the benign September inflation print will ease some of the pressure for the (Hungarian) central bank to deliver tighter monetary conditions, we think that it is too early for it to consider realigning the one-week depo rate to the base rate at 0.60%.”

The bank hiked the one-week depo rate by 15 basis points to 0.75% on Sept. 25, which helped shore up the weakening forint and reverse a negative trend.

On Friday, the forint EURHUF= was up 0.1% at 357.20 to the euro, after it outperformed peers on Thursday.

Hungary posted a foreign trade surplus of 251 million euros ($295.98 million) in August, above analyst forecasts for 140 million.

The Czech crown EURCZK= was also 0.1% firmer, even though the Czech Republic’s daily cases of the novel coronavirus rose to 5,394 on Thursday, the third record tally in a row.

“Thursday was a bad day for the CZK rates, (on) the long end dropping by 6 bps on disappointing retail sales, a record number of new COVID-19 cases and tighter government restrictions announced in the afternoon,” Komercni Banka trader Marek Lesko said in a morning note on Friday.

The Czech government will tighten anti-coronavirus measures from next week, with new curbs on sports and cultural venues and restaurants as the country struggles with a surge of new cases, Health Minister Roman Prymula said on Thursday. nL8N2GZ4SK

Stocks were mixed, with Bucharest’s blue chip index .BETI firming 0.3% while Warsaw’s .WIG20 and Budapest’s .BUX weakened 1.5% and 0.7%, respectively.

CEE MARKETS

SNAPSHOT

AT 0955 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2020

Czech crown

EURCZK=

27.1600

27.1800

+0.07%

-6.36%

Hungary forint

EURHUF=

357.2000

357.5000

+0.08%

-7.29%

Polish zloty

EURPLN=

4.4800

4.4900

+0.22%

-4.99%

Romanian leu

EURRON=

4.8725

4.8735

+0.02%

-1.73%

Croatian kuna

EURHRK=

7.5670

7.5670

+0.00%

-1.61%

Serbian dinar

EURRSD=

117.4600

117.5600

+0.09%

+0.09%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2020

Prague

.PX

875.41

874.6800

+0.08%

-21.53%

Budapest

.BUX

33460.14

33697.94

-0.71%

-27.39%

Warsaw

.WIG20

1694.25

1719.91

-1.49%

-21.20%

Bucharest

.BETI

8906.97

8875.47

+0.35%

-10.73%

Ljubljana

.SBITOP

835.43

836.55

-0.13%

-9.77%

Zagreb

.CRBEX

1614.80

1615.94

-0.07%

-19.96%

Belgrade

.BELEX15

692.04

691.75

+0.04%

-13.68%

Sofia

.SOFIX

421.98

421.65

+0.08%

-25.73%

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

2-year

CZ2YT=RR

0.0660

-0.0160

+077bps

-2bps

5-year

CZ5YT=RR

0.5780

-0.0130

+131bps

-1bps

10-year

CZ10YT=RR

0.9310

-0.0380

+146bps

-3bps

Poland

2-year

PL2YT=RR

0.0240

-0.0100

+073bps

-1bps

5-year

PL5YT=RR

0.5580

-0.0060

+129bps

+0bps

10-year

PL10YT=RR

1.3090

-0.0180

+184bps

-1bps

FORWARD

3×6

6×9

9×12

3M interbank

Czech Rep

CZKFRAPRIBOR=

0.29

0.29

0.34

0.35

Hungary

HUFFRABUBOR=

0.89

0.91

0.95

0.76

Poland

PLNFRAWIBOR=

0.19

0.19

0.19

0.22

Note: FRA quotes

are for ask prices

**************************************************************

($1 = 0.8480 euros)

(Reporting by Krisztina Than; editing by Uttaresh.V)

(([email protected]))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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