It opened a touch stronger, but quickly fell into sideways trade as it hovered in the range EUR/CZK 29.925-30.01. The market ignored the fact that the government made final approval to the sale of Cesky telecom to Spanish Telefonica. Spaniards will pay for it CZK 82.6 bn. The execution of the sale should not affect the FX market directly since the central bank will exchange the coming euros. Moreover, Telefonica will likely use credit in korunas to finance part of the deal. The market also ignored successful 10-year bond tender. The government crisis didn’t progress yesterday. The cabinet postponed the discussion on the Freedom Union’s suggestion to whole government resignation to next Wednesday. Jaroslav Bures, non-party minister, left the government yesterday. PM Gross obviously doesn’t want to give up and will play the game to the bitter end.
Today no important data nor event are due. Thus the market might be calm as yesterday. The activity is low and tomorrow’s pope’s funeral will diminish it further.
(CSOB - Investment research)