Czech crown opens firmer, seen locked in range

PRAGUE, Sept 26 (Reuters) - The Czech crown opened slightly firmer on Tuesday but is expected to stay locked in a tight range ahead of Wednesday's central bank policy meeting.

At 0716 GMT the currency traded at 28.455 <EURCZK=>, from 28.480 late on Monday.

The central bank board is due to discuss interest rates on Wednesday and some analysts expect it to tighten policy by 25 basis points. Most in the market, however, expect the bank to wait until at least October before raising rates.

"The crown market will bide time until Wednesday, when the central bank meets. Today (Tuesday) it should not break out of a range of 28.40-28.50," said Komercni Banka in a morning note to investors.

The bank last raised rates, by 25 basis points, in July to contain inflation in an economy growing at 6 percent.

Analysts said the government's approval of the 2007 central state budget draft late on Monday with a deficit of 91.3 billion crowns, including the sale of part of the state's stake in power producer CEZ <CEZPsp.PR>, would not hit the crown as the shortfall was in the range long expected by the market.

----------------- MARKET SNAPSHOT AT 0716 GMT ----------------- Crown/euro <EURCZK=> last deals at 28.455 (0.07 pct) Crown/dollar <CZK=> at 22.352 bid (0.11 pct)

5-year yield due Oct 2010 <CZ5YT=RR> 3.63 pct bid (3 bps) 10-year yield due Jan 2016 <CZ10YT=RR> 3.86 pct bid (2 bps)

5-yr CZK/EUR mid yield spread <DE114147=> 7 bps (vs 4) 10-yr CZK/EUR mid yield spread <DE113529=> 20 bps (vs 18)

Current levels versus prior domestic close at 1500 GMT --------------------------------------------------------------- ((Reporting by Alan Crosby; prague.newsroom@reuters.com; Reuters Messaging: alan.crosby.reuters.com@reuters.net; +420 224 190 477; editing by Ruth Pitchford))

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Keywords: MARKETS CZECH CROWN OPEN