UPDATE 1-Czech c.banker sees weaker crown, rate hike delay

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Czech central bank Governor Zdenek Tuma sees no reason for the crown to "jump significantly" in the space of a few weeks, a newspaper quoted him on Wednesday as saying, reiterating his previous stance on the currency.

Tuma told the mainstream daily Mlada fronta Dnes that he expected a reversal in the crown's rise, especially given a record interest rate discount versus the euro zone, a deepening current account deficit and lingering political uncertainty.

The crown has gained 3 percent versus the central bank's inflation forecast drawn up in October, which used a rate of 28.3 per euro as the initial assumption. It matched its lifetime peak of 27.410 to the euro late on Tuesday .

"I do not see reasons for the crown to jump significantly within a few weeks," Tuma was quoted as saying. "I do not like to see the crown frequently move in such jumps and to see it soar by many percent within a few weeks."

The crown slid to 27.520 early on Wednesday on Tuma's remarks.

The governor said the firm currency was increasingly calling into question expectations of an interest rate increase in the first quarter of this year.

"I do not want to draw any strong conclusions for the first half of the year. But the stronger the exchange rate, the lower the probability that we will nudge interest rates higher in the foreseeable future," said Tuma.

This confirmed his stance in a Reuters interview last month, when he also said interest rates may rise somewhat less or later than previously thought and that the crown's earlier rise was on the verge of being "totally crazy" [ID:nL11602090].

Czech official rates have been the lowest in the European Union and a full percentage point below the euro zone equivalent, reflecting the strength of the currency, which has tightened credit conditions.

[PRAGUE/Reuters/Finance.cz]