INSTANT VIEW 3-Czech Nov C/A gap narrows as market forecast

    The Czech current account deficit 
narrowed in line with expectations to 11.15 billion crowns 
($521.3 million) in November, from a 26.22 billion crown gap a 
month earlier, data showed on Tuesday. 
    The 12-month rolling deficit shrunk marginally to 146.2 
billion crowns, holding steady at 4.6 percent of this year's 
estimated gross domestic product (GDP), according to Reuters 
calculations. 
 
KEY POINTS: 
(CZK billions)           Nov         Oct           Nov forecast 
Current Account         -11.15      -26.22         -11.50 
Financial Account        19.88       26.76           n/a 
Net Direct Investment     3.79       12.81           n/a 
 
 (For full table, double click on..................[nPRA001118]) 
 
- The monthly gap is mainly due to a 17.8 billion crown 
shortfall on the income balance, including dividend payouts, 
reinvested profits and other transfers of income. The income 
deficit narrowed from a 30.4 billion gap a month earlier. 
- The balance of foreign trade in both goods and services shows 
a 8.9 billion crown surplus for the month, up from a 5.9 billion 
surplus in October. 
- Net foreign direct investment inflows total 3.8 billion 
crowns, which includes 8.1 bilion crowns in reinvested profits. 
- Portfolio investments show a net 2.6 billion crown inflow, 
mainly due to purchases of local currency government bonds by 
foreign investors. 
 
COMMENTARY: 
    PAVEL MERTLIK, CHIEF ECONOMIST, RAIFFEISENBANK, PRAGUE 
    "The full-year deficit on the current account for 2006 will 
very likely only slightly exceed 4 percent of GDP. 
    "The financial account of the balance of payments ended in a 
19.9 billion crown surplus in November, and on an annual basis, 
the financing of the current account deficit by a surplus on the 
financial account has improved. This is good news for the crown 
from a long-term perspective, and should support its long-term 
appreciation trend." 
     
    JAN VEJMELEK, HEAD OF ECONOMICS AND STRATEGY RESEARCH, 
KOMERCNI BANKA, PRAGUE 
    "Our fears of a deeper shortfall did not materialise. 
    "However, nothing changes our view that concerns over a 
deepending external imbalance are justified. We should see the 
sharpest worsening on the current account in data for the fourth 
quarter of 2006. This is also the reason why we expect a 
correction in (recent) gains to the crown during the first 
quarter of 2007." 
 
MARKET REACTION: 
- Crown at 27.760 per euro  by 0925 GMT, hugging a 
recent range. 
 
BACKGROUND: 
- Analyst expectations before data release       [ID:nL12825436] 
- Czech Nov foreign trade figures                [ID:nL09833629] 
                                                 [ID:nL09931969] 
- Polish Oct C/A                                  [ID:nL1398680] 
- Slovak Oct C/A gap                             [ID:nL28190064] 
- Hungary's Q3 C/A gap                           [ID:nL29754016] 
- Report on last Czech c.bank rate decision      [ID:nL20551907] 
                                                 [ID:nL20599163] 
 
LINKS: 
- For further details on November of payments numbers and past 
data, Reuters 3000 Xtra users can click on the Czech National 
Bank's website: 
    http://www.cnb.cz/en/statistics/bop_stat/ 
 
- For LIVE Czech economic data releases, click on        
- Instant Views on other Czech data                 [CZ/INSTANT] 
- Overview of Czech macroeconomic indicators            [CZ/ECI] 
 
- Key data releases in central Europe    [CEE-CONVERGENCE-WATCH] 
- For Czech money markets data click on                 
- Czech money guide                                       
- Czech benchmark state bond prices                    
- Czech forward money market rates                       
 
 ((Writing by Marek Petrus; Editing by Alan Crosby; 
prague.newsroom@reuters.com; Reuters Messaging: 
marek.petrus.reuters.com@reuters.net; +420 224 190 477)) 
 ($1=21.39 Czech Crown) 
  Keywords: CZECH BALANCE/  
    

[PRAGUE/Reuters/Finance.cz]