The Czech koruna retreated from one-year
high on Friday. The unit opened rather
strong at 31.29, but it weakened almost
whole trading session. There was no
particular stimulus for the slide. The
movement was probably result of some
profit-taking and squaring of short-europosition
ahead of the weekend. However,
we do not see the koruna bullish mood
overdone. On the other hand, recent koruna
gains are a bit fragile because they are
caused by a rate cut speculation which
might not fulfill.
The central bank has got nervous due to the
recent koruna’s gains. Central Bank Vice
governor Ludek Niedermayer warned the
market that the koruna's four-month rally
against the euro might not last, and might be
linked to market volatility. The CNB board
will be probably quite reluctant to raise interest rates under such market
atmosphere. Today, the market should be
rather quiet because traders might wait for
tomorrow’s crucial data.
ČSOB - Investment Research