The Czech koruna sunk yesterday as traders afraid of early polls in Poland. The unit after brief firming change direction and negative trend was intact for the rest of the session. The koruna opened at EUR/CZK 28.35 to drop as far as 28.528 in the evening.
The market shrugged off the December current account deficit, which came below forecast at CZK 11.9 bn. The figure was better due to one off payment of debt of Slovak government to CSOB. Excluding the payment the deficit might have been larger by CZK 7 bn. December data ones again confirmed strong outflow of dividends.
Today the koruna may recover significantly, as Polish President Lech Kaczynski didn’t decide to dissolve the parliament. The koruna tested unsuccessfully both limits of the current trading band 28.22 and 28.52 in recent two session, therefore it may stay within the band for another couple of sessions. Today’s industry output may not affect the market, because reliability of the indicator is ahead of major revision next month low.
(CSOB - Investment research)