It opened at EUR/CZK 28.41 and drop to the 28.54 by the end of the session. The koruna mostly followed the region, especially the zloty, which lost ground in the afternoon. However also the fall of Icelandic crown may weighted. The market mostly shrugged of the news from Hungarian daily, that Hyundai is also in talks with Hungary over its new plant. That news doesn’t seems to be correct, moreover the PM Paroubek confirmed that the deal waits only for final approval of Hyundai, which should come by March 2. The koruna fell pretty slowly due to heavy selling of euros. Today 4-year auction may not affect the FX market, therefore traders may wait for tomorrow’s rate setting meeting of the CNB. Currently weaker koruna lift some pressure on the bank to cut rates.
The currency may bounce back and may not break through the technical barriers at 28.60. Nevertheless, we do not see significant gains ahead of the meeting. A rate cut seem to be unlikely under such negative atmosphere on the currency markets.
(CSOB - Investment research)