The unit rose in the first half of the day from 29.585 and touched the new high just before the noon. The koruna gained from expected foreign trade surplus of CZK 3.4 bn in January, but positive atmosphere on neighbor markets weighted too.
The trade balance confirmed the excellent trend of the previous three months, when the trade performance improved significantly year on year. The high surplus is based mainly on the high exports of machinery, which were 42 % higher y/y while overall exports rose by 30% y/y. The current data confirms that the Czech economy is coping with the strong koruna without serious shocks. If we take into account the start of the new car factory in late February, the full-year balance will probably show a surplus this year, for the first time since Czechoslovakia broke up.
Later on, the koruna mildly retreated, but closed stronger than on Friday.
Today all eyes will be at the January inflation. Low monthly rise (0.2% m/m) is slightly negative for the koruna, because opens room for another rate cut. Further, the central bank’s minutes might reveal some new details from the last meeting. Thus it might be more difficult for the koruna to strengthen today than on Monday.
(CSOB Investment research)