The Slovak koruna recouped part of its previous losses on demand from London banks, but remained exposed to political uncertainty. The EUR/SKK moved from the opening 37.73 to 37.67 and oscillated around this level for the most of the day. The economic data (industrial and construction output) were only of second importance yesterday, although they were better-than-expected. The koruna achieved support from NBS governor Šramko who said that the approval of a June date for the general election would stabilise the currency. Following the announcement the koruna firmed to 37.64, however there was a slight correction at the end of the day and the unit closed at 37.67.
Today, the December retail sales and industrial wages are the only releases on the eco agenda. The market expects good results, but we doubt this data will be able to change anything. The focus will be on Parliament which would vote on the proposal to hold early elections in June. Its approval should not be a problem. After yesterday’s strengthening room for further firming remains quite limited. The level of 37.75 seems to be a solid resistance. If we see a break though it, a move towards 38.0 will be very likely. The trading should remain volatile in coming days and weeks, movements in both directions cannot be ruled out. The key will be, of course, the politics.
ČSOB - Investment Research