The Czech koruna inched higher on Friday

The Czech koruna inched higher on Friday. Initially, it started weak, as touched daily low EUR/CZK 30.515 in the first hour of the session. However the atmosphere change quickly and the koruna drifted higher to EUR/CZK 30.36. In last hours of the day, bears won again, hence the currency closed little stronger at 30.45 zone. There was not real domestic event behind Friday’s price action. Nevertheless worlds of vice-governor Dedek and the low PPI weren’t supportive for the koruna. First, the November PPI fell 0.3 % and diminished hopes for interest rate hike any sooner than early fall. Dedek confirmed such a rate outlook, as he quoted he didn’t see any arguments for an activist policy that would mean cutting or raising rates in any way. Moreover, he added that his analyses gave no ground for further firming of the koruna. On the other hand, he don’t regard recent koruna strengthening as fatal. He explicitly said: ”We are not in the same situation like in 2002.” Today the November retail sales moderate rise, namely 8% y/y, should not be stimuli for the market. Thus the koruna may stay little changed within previous trading band.

ČSOB - Investment Research