PLN/CZK touched new lows at 5.67 as the Czech koruna was surprisingly resilient to the weakness on the global equity markets and strengthening US dollar. Comments by the Czech Minister of finance Miroslav Klaousek arguing in favour of Eurobond issue could have helped the koruna, but it does not fully explain its outperformance. Another explanation is that investors during global market nervousness prefer to shift their funds from zloty and forint to the relatively safer Czech koruna, especially when they see the Swiss frank being fixed towards euro now.
If that is the case, we do not believe the koruna can play this role for a long time. If the growth outlook for the eurozone deteriorates even more, the Czech economy is not going to be resilient to the slowdown. As yesterdays GDP data showed the risks are even skewed to the downside. Similarly to Hungary the current growth too much relies on exports and investments of exporters in the cyclical sectors such as autos and machinery. Domestic consumption is still negative as most of the companies continue to be reluctant to create new jobs, real wage stagnates and government pushes further austerity measures. Putting it together with surprisingly low Czech inflation (-0.3% m/m, 1.7% y/y in August), one can easily imagine the Czech National Bank could get nervous about strengthening koruna and tighter monetary conditions.
On the other hand Polish central bank seems to stay more on the hawkish side. According to the comments after last NBP meeting, the central bankers continue to believe the weak zloty poses inflation risks. Hence at the current weak levels we do not exclude interventions.
PLN/CZK touches new lows. Further downside move can be justified only in short term by rather technical factors