The Czech koruna jumped to new 2-year
high yesterday on news Czech financial
group PPF sold its TV station Nova to US
investors CME for USD 529 m in cash. The
koruna touched EUR/CZK 30.53 just at the
opening and slowly retreated in the
remaining of the session to close in the 30.65 zone.
The rise of the koruna was not wise
speculation, because the transaction was
likely done. Exchange of 529 m dollars may
explain the strengthening of the koruna in
recent days. Moreover, we could not be sure
that they exchanged dollars at all, because
PPF is present at other markets (Russia,
China…) too. However, that’s obvious that
they had exchanged dollars ahead of
announcement of transaction or they do not
intend it at all.
The market ignored October’s current
account which posted a deficit of CZK 12.9
bn, i.e. in accordance with forecasts. The
rise in the deficit compared to September is
based on the formerly published seasonal
reversal of the trade balance, which turned
from September’s surplus into a moderate
deficit of CZK 4.1 bn in October. Hence
October’s data included no new
information on the current account
trends. The financial account brought two
major pieces of information. Above all, it
bore out the formerly noticed high demand
of foreign investors for Czech bonds. This
demand is related to the fast rise in bond
prices over the last three months. On the
other hand, October was not one of the
months that saw large inflows of foreign
direct investments.
Today the market may digest yesterday
development. Stagnation of PPI in
November may not change thinking of the
market. It support a scenario of stable
interest rates for 6 months at lest. Thus the
koruna may hover around EUR/CZK 30.70
level.