The Czech koruna as the other currencies in Central Europe went down sharply yesterday morning owing to the continuing change mood of foreign investors. Rising American yields changed sentiment in the region and invoked changes of foreign portfolios and profit-taking. The koruna started at 29.80 EUR/CZK but quickly shot above 30.1 EURCZK in the morning as the investors closing down their positions in the region. Those sellouts badly struck not only the bond market but also shook up the stock market which showed the second largest fall in its history. Despite of the poor sentiment on the market, the koruna was able recover from of its morning lows in the afternoon, in contrast to the zloty, forint and the Slovak koruna, and it closed at 29.85. Nevertheless, yesterday’s negative correction partly erased the earlier the koruna gains reached in the second half of February and in the beginning of March and it also mitigated the rate cut expectations. Today the slight correction of the previous weakening is probable but calming down of the market will depend on the regional market development especially in Poland.
(CSOB - Investment research)