As in the whole region, the key incentive was the entrance of the Slovak koruna into ERM2. Initially, the unit hovered on the weaker side of the EUR/CZK 29.00 level. However, the koruna broke through the level in the afternoon touching its 3-year high at 28.933. Although the unit bounced back above 29.00 by the end of the European trading, it returned to 28.95 in U.S. trading.
The Slovak step closer to euro adoption opened for the koruna a room to strengthen. If the koruna succeeds to break through its all-time high at 28.85, it may climbed quickly as high as 28.50. However, there are two more obstacles. First, tomorrow decision on interest rates in Poland which could hinder firming of the zloty. Second, an expected rise in euro interest rates on Thursday may make the koruna and its regional peer less attractive. Nevertheless, the koruna may test its all time high today.
(CSOB - Investment research)