As oil gets dearer and dearer, even Czech truck haulers are mulling a blockade of refineries. However, it does not seem as serious as protests in France or Britain. The ministry of industry may propose a higher-than-expected hike in retail energy prices. According to the Cabinet's plan, electricity tariffs would increase by 14% and gas tariffs by 15% in January 2001. Meanwhile, the opposition Freedom Union floated its proposal to cut excise taxes on oil by CZK 2 (about 6% of the retail price). Opportunism?
The Czech koruna took battering yesterday as the euro seemingly found the floor and profit taking lifted it. The koruna lost from 35.40 to 35.53 CZK/EUR and it mostly ignored governor Tosovsky's comments that he expected the koruna to remain stable. Vis-a-vis the dollar, the koruna weakened as well, trading at 41.30 CZK/USD. The koruna reached its lowest level since May 2000 and seems on a way further down.
Bonds recovered slightly as PPI figures fell in line with expectations and did not provoke any further inflation fears. Current benchmark figures: MoF 6.75/05 100.45-75 (+5 bps), MoF 6.30/07 96.50-80 (+5 bps), MoF 6.40/10 95.50-80 (+5 bps).
(Ondrej Schneider and Michal Michalov)