The Czech National Bank left its interest rates unchanged yesterday but indicated a tightening basis.
The government sold its 66% in the ailing Komercni banka to the French bank Societe Generale. The price looks high (3.2 times the net book value, CZK 1,750 per share) but it appears that there are some guarantees for the French, though the government refuses it.
The OECD joined domestic economists and criticized the Cabinet plan to sell energy companies in a single bundle. According to the OECD (and common sense) it will limit competition. The government has confirmed its plans regardless, quoting fears of cheap energy imports.
Vaclav Klaus accused the Constitutional Court of political meddling as the Court defended independence of the CNB, although the independence is not, Klaus says, entrenched in the Constitution.
A potentially damaging scandal is slowly unfolding within the Czech security services (yes, we have heaps of them), as one blames another for spying on it. The NATO sponsored security clearances are being questioned as a result.
Koruna appreciated following the sale of Komercni banka (and expected inflow of foreign currency to pay for it) and closed below the 33.80 CZK/EUR and 39.40 CZK/USD. Bonds were mixed, as the long bond prices fell (15Y bond by 25 bps), but shorter maturities gained (5Y bond by 15 bps).
(Ondřej Schneider)