Despite shaky start the koruna went
stronger yesterday. The unit opened at
EUR/CZK 30.39, where it fell on Tuesday.
However, surprisingly November trade
surplus made any other drop of the currency
difficult. Foreign trade posted a surplus
CZK 5.2 bn in November, while the
market expected CZK 6 bn. This is the
biggest monthly surplus in a decade.
That’s now obvious that Czech trade
heads for only CZK 30 bn deficit for the
whole year. Czech exporters likely gains
from strong Christmas demand in
western Europe, because exports of cars,
TV sets and electronics led the trade in
November. The result is strongly positive
for the currency.
Nevertheless, simultaneous rebound of
the US dollar impeded any significant
koruna strengthening on the figure,
because many investors were buying
dollars for korunas at the moment. Thus
the koruna was able to gain only about
ten hellers against the common currency
to close at EUR/CZK 30.36.
Today no event is scheduled in the calendar,
thus the market may not get any new trading
idea. It seems to difficult for the koruna to
break Monday’s high of EUR/CZK 30.30
now, as the US dollar stays relatively strong.
However all other factors are positive for the koruna: strong foreign trade performance,
privatization of Cesky Telecom and betterthan-
planed development of public finances
Moreover, expected issuance of government
bonds in euro (EUR 1.5 bn) is more likely
after deputy finance minister Janota said
yesterday that the government would pick
Eurobond lead managers by March.
However, he added that the government has
not decided issue yet, but it sounded pretty
inconvincibly for the markets. Thus we put
the risk for the stronger koruna, especially if
the dollar return to falling trajectory.
ČSOB - Investment Research