* Crown seen dropping to the euro, rebound after 6 months
* Drop seen slightly smaller than a month ago.
* Poll details on <CZ/ECON07>
By Jan Lopatka
PRAGUE, May 20 (Reuters) - The Czech crown is expected to
weaken 2.5 percent over the next 6 months on dividend payments
but return to an appreciating trend at a slightly firmer
trajectory than previously expected, a Reuters poll showed on
Tuesday.
The currency firmed 11.1 percent to the euro <EURCZK=> over
the past year, but has dipped from all-time highs on the strong
side of the 24.8 mark, trading at 25.07 on Tuesday.
The poll of 13 analysts showed a median forecast for the
crown at 25.20 a month ahead and a low of 25.70 in half a year,
underperforming its regional peers, before firming back to the
25 level in a year's time.
Last month, analysts had expected the crown to dip to 25.90
in six months and recover to 25.25 a year ahead.
The currency has been led up by strong economic growth and
exports, although in the past months new foreign orders have
been slowing, indicating a possible cooling in output.
Analysts say the crown could drop seasonally in the summer
on outflow of dividends to foreign investors, and on a possible
euro drop against the dollar, which the crown would follow.
"The firming potential for this year has been exhausted,"
said Vojtech Benda, senior economist at ING in Prague.
He predicts the crown dropping to 25.80 in three-month time
before resuming growth to 24.65 a year ahead.
"Lot of the dividends will be done over the summer... we
expect 1 billion euros more than last year."
The crown's forecast 2.5 percent decline over the next six
months lags a forecast of 1.3 percent growth in the Polish zloty
<EURPLN=> <ID:nL09856069> until the year end and weakening of
1.8 percent estimated for the Hungarian forint <EURHUF=>
<HUEURO4> against the euro.
The Slovak currency, which Bratislava will convert to euros
in 2009, is expected to make the change at 31.75 per euro, or
some 1.4 percent weaker than Tuesday's level.
The crown has been the main anti-inflationary factor in the
Czech economy, which slowed down to 5.4 percent in the first
quarter from 6.6 percent in the final three months of 2007.
Inflation soared to nine-year high of 7.5 percent in
January, in part due to hikes in sales and excise taxes and
regulated prices of housing and energy, but also due to
demand-side pressures.
The central bank raised interest rates five times over the
past year to 3.75 percent, and most analysts expect it to leave
rates flat throughout the year.
However, many say an alternative scenario is one more rate
hike in June, which would put Czech rates on par with the euro
zone, and could come especially if the crown drops.
For TABLE with responses, click on [] <CZ/ECON07>
(editing by David Christian-Edwards)
