The trading was jittery since the morning, after the Bank Board meeting
outcome the koruna fell from 30.260 to 30.600 and closed at 30.530. Versus
the dollar the koruna also softened after the CNB announcement. Before the
cut the koruna traded range bound 30.150 - 30.400, then fell to 30.640 and
closed at 30.500. In our opinion the CNB fully took advantage of a room made
by falling inflation and also by slower economy rebound and by strong
koruna. We consider it as a right decision. The current repo rate is 3.00%,
which is 25 bps below the ECB basic rate.
The CNB revised its forecast for CPI and GDP for 2002 and 2003 as expected.
The central bank sees economy growing by pace of 2% -2.7% y/y in 2002 and
2.1% - 3,8% y/y in 2003. It sees end-2003 inflation rate to be in range 1.8%
- 3.2% y/y and July 2003 inflation from 1.6% to 3% y/y. The CNB said that it
watched koruna very closely and wouldn't comment on talk of hidden sell-off
of the koruna.
Pavel Racocha, a member of the CNB Bank Board, said for HN newspaper that a
new government intends to cooperate with the CNB on a middle-term budget
outlook and also on solving some problems linked to koruna's exchange rate
development. In face of the last facts it is clear that the koruna will stay
above the level EUR/CZK 30.00 for longer time and the market will watch the
CNB. Today we expect the EUR/CZK from 30.450 to 30.750 and the USD/CZK from
30.300 to 30.850.
open max min cls open 26/7
EUR/CZK 30.200 30.600 30.150 30.530 30.580
USD/CZK 30.150 30.640 30.150 30.500 30.560
Stepanka Kuzilkova, Investment Research, CSOB