The Czech koruna shot up yesterday on a
surprising interest rate hike. The unit started
to strengthen already at 10:00 as political
uncertainty slowly waned and some people
bet that the central bank would raise rates.
Thus the koruna reached 31.75 just before
announcement of rate decision at 12:45.
After the announcement it jumped into the
31.55 zone. The start of a rate hike cycle is
koruna positive and might bring some
support for the unit. However we do not
expect the koruna to strengthen a lot
because the key meeting on prospect for PM
Vladimir Spidla will be held on Saturday. We
still regard the scenario that Mr. Spidla will survive as most probable.
ČSOB - Investment Research