It opened at the level of EUR/CZK 29.92 and was losing ground for the whole session to close at EUR/CZK 30.05 zone. The market completely ignored the night agreement among former coalition parties on a new government. It was forward-looking attitude, as the Social Democrats refused the agreement in the evening. Thus the talks are at the real beginning again. Moreover, two ministers from the Freedom Union resign after the Social Democrats rejection. Hence all future scenarios are again in cards (early election, minority government with the Communists’ support, former coalition). Nevertheless, government crisis only added some fuel in overall negative environment. The crucial was strengthening of the dollar
against the euro and pressure on the Polish zloty.
Today, the February retail sales are due, but they hardly affect the market as usual. However, serious government crisis and worries of investors from political development in Poland make any gains for the koruna difficult now. The key will be the EUR/USD fluctuations.
(CSOB - Investment research)