The Czech local forex market was the only
one which was opened in Central Europe on
Monday, thus the atmosphere was rather
relax. The koruna strengthened in thin
market to EUR/CZK 31.45 on Friday. There
was no particular incentive for the move, but
squaring of positions in euros ahead of long
weekend could weighted. On Monday the
koruna opened a bit stronger but later on
lost about half of the Friday’s gains to close
at EUR/CZK 31.50 zone. Released high
October’s government budget deficit didn’t
have any impact on the market. The budget
showed CZK 19 bn deficit in October,
pushing cumulative deficit to CZK 59.5 bn.
Nevertheless, the deficit is still much lower
than in the same period of the last year. The
FinMin paid a loss of the state Konsolidacni
agentura last month. We still believe the
budget will post significantly lower deficit at
the end of the year than was approved.
Today the market may come back to regular
activity. However, we do not expect a
significant price action, as traders may wait
for a trade balance figure due on Friday.
Nevertheless, the conditions are in favour of
little stronger koruna this week, because of
an expected low trade deficit.
ČSOB - Investment Research