Yesterday, the Czech koruna opened close to its highest this year's level against the euro. The support for its strengthening came from the Czech national bank Friday' statement that its foreign currency reserves increased to USD 27 bn in March and that such increase is undesirable. Therefore, the bank plans to sell foreign currency earned from investing the reserves. The new CNB tactics may appreciate the koruna in the medium terms, however, even the expectation pushed the koruna up immediately to its year's record high of 32.10 even when no date of sell was mentioned. The CNB vice-governor L.Niedermayer calmed the market expectation in the afternoon. He said that the CNB is not going to affect koruna's rates by selling foreign currency.
However, we expect the koruna might attack the EUR/CZK 32 level during a few days.
ČSOB - Investment Research