On Monday, the Central European currencies saw a mixed trading. While the zloty dipped below the support at EUR/PLN 4.12 and the Polish 10Y government bond yields hit yet another all-time low, the Czech koruna slightly weakened and closed above the resistance at EUR/CZK 25.20.
In Prague, a member of the Czech National Bank’s board, Lubomir Lizal, echoed previous statements of his colleagues and said later in the afternoon that interventions are the second best monetary policy tool now. However, as his fellow central bankers, he did not mention any specific exchange rate level and just said he was comfortable with the current forecast envisaging interventions around the middle of the next year. All in all, Lizal’s comments confirm that the scope for prospective strengthening of the koruna is limited.
Technically, the 55 days average and the 200 days average (EUR/CZK 25.15 and 25.11, respectively) could, in our view, provide a solid support for the koruna in the remainder of this year (let us recall that the koruna usually tends to be under pressure during Christmas thin trading). Hungary’s headline inflation slowed a bit more than expected in November (5.2% Y/Y) and opened room for further monetary easing in Hungary.