The Czech koruna shot up to a new all-time high EUR/CZK 28.22 on Friday. There was no particular event behind the price action, but the combination of several factors weighted. First of all, market liquidity is usually lower at the end of the week. Moreover, strengthening of the zloty improved market atmosphere too. Finally, investors have been expecting a final (positive) decision of Hyundai on investment in the Czech Republic. Regarding the trading, the EUR/CZK opened at 28.35 to reach mentioned lifetime low around midday. The unit pared some gains in the afternoon to close at 28.30. The governor CNB Tuma warned in the evening that a strong koruna might have hamper economy’s growth. Nevertheless, his words didn’t contain any eventual CNB’s action against the strong koruna, therefore the market shrugged them off.
Today, the December current account data are due. The deficit may climb to CZK 14.5 bn because of season. The figure around our forecast may not affect the market. Therefore the koruna may hover in a 28.20-28.50 range in days to come. Final Hyundai’s decision is a positive risk, while possible warning against a strong koruna from the central bank a negative one. We expect at least one comment from CNB Board members this week.
(CSOB - Investment research)