On Tuesday, the Czech currency dipped from the 29.350 in the morning to the
final 29.520 korunas per euro. The presence of intervention fears and also
strong words from the central bank's officials M. Erbenova and J. Frait
helped the koruna to weaken.
M. Erbenova told in an interview with Reuters
that the rise was overdone and the CNB was as ready as ever to step in to
push the currency lower. She would not comment on reports the CNB had been
silently buying small amount of euros last week. She openly said, that the
strong koruna could allow the bank's policy makers to cut interest rates
when they meet on July 25. Development of currency and also inflation may
lead to rather marked cut in the bank's inflation prediction on July 25.
According to J. Frait, the koruna could weaken below 30.50 per euro. The
USD/CZK stayed in range 29.080 - 29.400 all day long. The exchange rate were
under the influence of contradictory development of the EUR/USD and EUR/CZK.
Due to yesterday's events we anticipate the market to stay nervous and the
koruna should further softened even without interventions. We expect the
EUR/CZK in the range 29.400 - 29.800. This morning the EUR/CZK started at
29.500 and the USD/CZK at 29.120.
open high low close today (17.7.)
EUR/CZK 29.350 29.590 29.310 29.520 29.500
USD/CZK 29.170 29.400 29.080 29.250 29.120
Stepanka Kuzilkova, Investment Research, CSOB