The Czech koruna started the day slightly weaker and touched EUR/CZK 29.695, daily low, in the first hour of the trading. However, the atmosphere calmed down quickly and the koruna together with the zloty waited for Polish prime minister’s statement. Both currencies rose after PM Belka only asked for early election (see zloty part). Thus the koruna gained 0.3 % and reached a new 2.5-year high at 29.555. It lost some ground at the end of the day to close at 29.6. Development of the political row was also supportive for the market. The PM Gross made an excuse for his previous statements which was asked by junior coalition partner, Christian Democrats (KDU). As a consequence, the KDU stopped temporally (at least) calling for Gross’ resignation. It seems that the dispute is over, the government will continue without any change. Weekend’s talks might confirm this scenario.
Today the market should digest political development and zloty’s rise. Thus there is some room for strengthening of the koruna. On the other hand, traders might wait for Monday’s foreign trade data.
(CSOB Investment research)