It was slowly falling from the morning when it opened at 30.48. Hence the koruna is as weak as it was at the end of April when the weak zloty pushed lower whole region. However the situation changed, as the zloty is stronger now and the koruna follow lower the Hungarian forint. That’s difficult to identify particular reason for recent weakening of the currency. Some people blames dividend outflows, but dividend season seems to be softer than last year. Negative interest rate differential could also play some role. Finally, exporters likely already hedged all their future euro revenues, since they used advantageous exchange rate at the beginning of the month. That’s obvious that the main driver of weakening are strong dollar and fear ahead of the referendum in France, but these factors could not clarify evident differences among CE currencies. Czech koruna retouched monthly low.
Today the pressure hardly disappear completely, but lower activity due to holiday in some countries may lift part of the pressure. Moreover, EUR/CZK 30.60 level may act as some technical resistance. On the other hand, the EUR/USD retreated again. Hence we kept our short-term negative outlook for the currency. The Central bank’s meeting on monetary policy may not affect the market as no action is expected.
(CSOB - Investment research)