The koruna continued to fall yesterday

The Czech koruna continued to fall yesterday. The unit touched EUR/CZK 31.55 in the first three hours of the session. Nevertheless, it almost ignored August’s current account, which posted CZK 18.2 bn gap what was in line with expectation. The Current account deficit shrank by almost half from the previous month, but negative influence of dividend outflows persisted. Therefore C/A for the whole year may end in record deficit of CZK 195 bn. The most positive feature of the release is two-year high inflow of foreign direct investments which jumped to CZK 19.9 bn in August. It eased fears that the Czech Republic was losing its attraction to foreign investors. The koruna recovered in the afternoon to close only little weaker at EUR/CZK 31.49. Moreover, the unit erased all losses in the American trading.

Today the koruna may develop a sideways pattern. September’s PPI figure may be taken, as some type of non-event. Traders may wait for tomorrow’s state budget draft vote in the Parliament. However, slight weakening pressure will likely persist.

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