Yesterday, the Czech koruna hit its 3-years low when it weakens to 26.18 EUR/CZK. The koruna was already hit last Wednesday by worse-than-expected GDP figures and thenceforth lost more than 1%.
The sell-off of the Czech currency has continued even this week. There might have been several other factors behind the weakening of the Czech currency. Some effect could have IMF’s comments. The fund expressed its support to Czech central bank’s plan to intervene to weaken the koruna if necessary. Moreover, we do not exclude a possibility of carry trades between the Czech and the Hungarian currency, which could explain the recent regional decoupling. While the koruna has lost almost 2% of its value from the beginning of May, the forint by the same time strengthen by almost 3%. Thus, the Hungarian currency shortly got below 290 EUR/HUF.
Meanwhile in Poland the zloty slightly weakened yesterday, but the technical barrier at the 4.20 EUR/PLN level has not been broken yet. The market eyes some interesting data from the domestic economy: industrial output, retail sales and unemployment. These releases may complete the picture about the Polish economy, which according to preliminary GDP figures is not in such a good shape as was expected. So, today’s release of the industrial output might strengthen speculations on another rate cut, which could be delivered already at the NBP meeting in June. Currently, the fixed-income market has been pricing a 50 bps reduction of the NBP base rate by the end of this year.