The Czech koruna jumped up on the excellent December foreign trade data on Friday. The only CZK 7.6 bn trade gap pushed the koruna from EUR/CZK 30.02 to a new 2.5-year high EURCZK 29.00, while the market expected CZK 17 bn deficit. The unit slightly retreated to EUR/CZK 29.95 at the end of the session, but it’s big chance the koruna will return to the high at least today. The low December gap brought the full-year deficit to only CZK 20.6 bn, less than one third of the 2003 deficit. Better than expected German economy and high previous investments remarkably improve Czech exports, while imports rose slowly. Given start of production in Toyota-Peugeot joint factory at the end of this month, we expect the remaining small deficit of foreign trade to fade this year. Today there is definitely risk of another koruna strengthening. The government might reveal some details on bids in Cesky telecom today. The calendar is almost empty today, CNB reserves will hardly achieve any attention.
ČSOB - Investment Research