The koruna started ad 29.86 CZK/EUR and in the morning it followed the weakening zloty. The Czech currency jumped again over the 30 EUR/CZK bound and it nearly touched its Wednesday lows. The sell offs carried on the stock market under intensive trading but the fall was not such huge as on Wednesday. The situation calmed down in the afternoon when the koruna started to firm after the fashion of the zloty. In the evening the koruna gained again and moved below 29.8 CZK/EUR. The koruna is towed by the sentiment in the region which was hit by rising US yields and political uncertainty in Poland. Moreover, the politic situation in the Czech Republic is also unclear because a smaller coalition party (Christian Democrats) insists on a replacement of the Prime Minister. The picture will be clearer after the congress of the biggest coalition party hold next weekend. That uncertainty can support volatility of the koruna within next days. But the fundaments of the Czech economy remain delicious. We think that the pressure on the FX market can calm down and the koruna may slightly gain today.
(CSOB - Investment research)