The Czech koruna opened at 29.500. During morning trading it continued to weaken and went as low as three-week’s minimum at 29.540. After a mild correction the koruna was flowing within a tight belt around 29,50 during the rest of the day and closed a bit weaker from yesterday at 29.510. Yesterday’s development can be explained solely by sentiment towards the Central Europe that seems to be currently worsened due to fiscal problems in Hungary and in ahead of Polish elections a bit too. Beside that also domestic political pressure within the government coalition is growing. On the other side domestic fundamental factors play strongly in favor of the koruna in the midterm and thus we expect the current political issues to have only limited impact. Nevertheless with the absence of any important domestic economic events, the uncertainty before weekend’s election in Poland can keep the koruna weak also during today.
(CSOB - Investment research)