The Czech koruna retreated from the four-month high yesterday. The session was very quiet, smaller trades from domestic clients dominated on the market. There was no interest from big London's names. The market digested new central bank policy concerning its reserves and traders understand now the CNB is not in a rush to sell euros and dollars. Slightly lower than expected February's current account deficit did not halt yesterday's weakening of the koruna. The C/A deficit stood at CZK 1.8 bn. The figures did not bring any new information, the balance is still under pressure of deepening income balance deficit. Balance of services also weighted as its surplus is shrinking. Improvement of the trade deficit is not enough strong to counterbalance the whole C/A deficit. Today, the activity should be again low. Today's figures (retail sales and PPI) are unimportant for the forex market. We expect the koruna to stabilize at 32,20 against the euro. It opened at 32.245 this morning.
ČSOB - Investment Research