The Czech koruna was little changed in the end yesterday. It initially tried to break through the EUR/CZK 29.00 level, but an opposite development of its regional peers damped the positive trend quickly. Hence the koruna returned to the 29.05 zone. The market was thin due to holiday in the U.S. The only significant news was the full-year state budget balance, which came at CZK – 56.4 bn. That exactly met the PM Paroubek forecast few days ago. Thus its another proof that Mr. Paroubek’s forecasts are worth to be watched. The result is only two thirds of approved deficit for the 2005, but slightly higher than we expected. Nevertheless, we should wait with final assessment, as the Finance Ministry is going to reveal further details on the budget this morning. Especially, that’s still not clear if the government paid CZK 20 bn debt to the CNB and some other extraordinary outlays. The FX market broadly shrugged off the figure.
Today no release is expected, thus the koruna may hover on the weaker side of the 29.00 level. The market might be more active, as holidays come to the end.