The Czech koruna drop by 10 hellers
against the euro yesterday. The unit
weakened continuously during the session.
The main driver was ongoing profit- taking
as the koruna failed to break the level of
31.20 on Monday. Moreover the unit was
pushed down because the bubble of the
imminent rate hike burned out. London
banks were buying euros, because they
probably squared euro-short positions.
People were also cautious to had large
koruna positions ahead of today’s GDP figure release.
GDP grew 3.1 pct in the first quarter, slightly
lower than expected. However consumer
demand momentum drop, while investments
accelerated. This is another signal for the
central bank not to raise interest rates
prematurely. Thus the koruna should continue to fall today.
ČSOB Investment Research