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