The Czech koruna jumped to an 11-month high against the euro

The Czech koruna jumped to an 11-month high per the euro yesterday on positive sentiment in whole Central Europe. Initially the EUR/CZK inched higher but later it sharply slid down. Fast first-quarter wage increase helped too because it raised the probability of a rate hike. On the other hand, fast strengthening of the koruna in the recent weeks tights monetary condition in economy and therefore it is an argument against an imminent rate hike. Hence, we regard the probability of a hike lower now than a month ago. Nominal average wage rose by 8.8 pct y/y in the first quarter, while wages in previous quarter rose only by 7 pct y/y. Higher wages in the public sector and longer average work-week backed the trend. Today, we see the koruna might continue to rise amid foreign demand for korunas.

ČSOB - Investment Research