The Czech koruna initially mildly
strengthened and tested new high around
EURCZK 31.30 level. However, the attempt
failed and the koruna slightly weakened
during the afternoon. The morning rise was
partly driven by initial strengthening of the
dollar against the single currency. The
koruna gains on overall positive atmosphere
in the Central Europe as well. Summing up,
the market was rather quiet and the unit kept
in the tight range of EURCZK 31.32 – 31.42.
Today, the main event is discussion over the
2005 budget in the Government. The ministers pledged to make a final decision
today. The budget deficit is already set up at
CZK 84 bn, thus the government will argue
over outlays cuts. It will be more show for
the voters and force measuring between
Social democrats and junior partner
Christian democrats. The debate may not
have a direct and significant impact on the
market. Thus, the koruna may continue to
develop a sideways pattern. Another test of
the EURCZK technical support at 31.30 can
not be ruled out.
ČSOB - Investment Research