Czech crown steadies near 3-month lows, eyes cbank

...whether policymakers deliver a widely-expected interest rate rise.

The crown hugged a tight range around 28.330 throughout the session and traded at 28.350 per euro by 1430 GMT.

Dealers reported thin activity due to public holidays in Germany, Switzerland and Britain, while U.S. markets were also expected to be quiet due to the Memorial Day holiday.

Analysts said last week's slide, which partly reflected a drop in neighbouring Slovakia's crown to a 10-month low amid general weakness in emerging markets, had brought the Czech currency close to key euro resistance levels at around 28.500.

"The currency is unlikely to receive any significant support from the CNB. The market has fully priced in Thursday's rate increase," said Jan Vejmelek, economist with Komercni Banka.

"Moreover, the profit repatriation season is approaching. But there is no change to the crown's long-term bullish trend as economic fundamentals remain more than good," he added.

The CNB's policy rate has held flat at 2.50 percent following increases totalling 75 basis points between October 2005 and September 2006.

Most CNB watchers have predicted policymakers would raise the rate by 25 basis point to a more than 4-year high on Thursday to respond to a pick-up in inflation to a 7-month high of 2.5 percent in April and buoyant consumption.

For surveys of analysts' interest rate expectations, click on [CZK/POLL].

----------------- MARKET SNAPSHOT AT 1430 GMT ----------------- Crown/euro last deals at 28.350 (-0.09 pct)

Crown/dollar at 21.050 bid (-0.16 pct)

5-year yield due Oct 2010 3.83 pct bid 10-year yield due Jan 2016 4.09 pct bid

5-yr CZK/EUR mid yield spread -57 bps 10-yr CZK/EUR mid yield spread -30 bps

Current levels versus prior domestic close at 1500 GMT ---------------------------------------------------------------

[PRAGUE/Reuters/Finance.cz]