The Czech koruna continued to rise on Friday. It opened at EUR/CZK 29.95 and slowly gained about 10 hellers to close at 29.85. The atmosphere was supportive for the koruna because the political row seemed to be almost at the end. Moreover, there is still positive mood in neighboring central European markets. The market didn’t receive any other stimuli. However, the situation changed over the weekend. Dispute within coalition got another food, as Mr. Kalousek the leader of junior coalition partner, Christian democrats, called for the Prime Minister’s resignation again. The PM Gross replied by asking Christian democrats to leave the ruling coalition. He prefer a minority government of Social democrats now. The strategy of Christian democrats or its leader Mr. Kalousek is really unclear just now. We are not convinced that he wants early election, but what is his motivation we don’t know. The battle is quite serious that it’s less likely that both Kalousek and Gross could survive it. Today the koruna should be under some attack, but we don’t believe that it will be losing heavily. Nevertheless, it may come back above the 30.00 level. The calendar is empty, hence political development may drive the market.
ČSOB - Investment Research