The Czech koruna lost ground yesterday, as the central bank surprisingly cut interest rates. The unit was under some pressure since the morning when it opened a touch weaker at EUR/CZK 30.30. The market was afraid of the CNB decision and overall mood in the region was negative. Nevertheless the koruna made almost all losses after the central bank announced rate cut at 1:30 p.m. The EUR/CZK shot up to 30.61. Despite small correction the koruna lost roughly 1 % yesterday. rate cut sent Czech koruna lower Today no important figure is due thus the koruna might erase some yesterday’s losses. A fall of US dollar is supportive for such price action. Moreover the Czech koruna may get some lift from the Slovak koruna which is elevated by intervention of the central bank. Nevertheless overall sentiment in the region is still negative, thus we do not expect that the koruna will erase all yesterday’s losses.
(CSOB - Investment research)