The current account showed a deficit of CZK 47.0bn (USD 1,2bn) for 2000 Q1-Q3, with the deficit for Q3 reaching CZK 19.9bn. Most of this was due to a trade deficit of CZK 76.8bn (CZK 33.4bn of which in Q3). Behind trade deficit widening we can found especially high prices of mineral fuels and recovering domestic demand, especially its investment part. The trade deficit was partly offset by a surplus on the services account of CZK 32.5bn (CZK 13bn in Q3).
On the financial account, there was an inflow of CZK 59.4bn (USD 1,6bn), of which CZK 7.9bn in Q3. The main item was foreign direct investment, with a net capital inflow of CZK 108.5bn (CZK 33.6bn in Q3). Portfolio investment showed a capital outflow of CZK 44.3bn caused by foreign securities purchases by domestic investors. Outflows of capital were also recorded for other investment (CZK 4.1bn) and financial derivatives (CZK 0.7 billion).
The Lower House of the Czech parliament will decide about the state budget for the next year today. It is expected that both “opposition agreement” parties, ČSSD and ODS, will be support the state budget proposal in today’s third reading.
The Czech koruna significantly weakened against euro yesterday as the FX market absorbed the information about the conversion of Česká spořitelna privatisation revenues into CNB FX reserves. Another reason behind the depreciation of the Czech koruna is a recovery of the euro against the dollar. Late on Monday the Czech koruna stood at 35,00 from 34.66 at the beginning of the yesterday’s trading. As euro reached the three-month maximum against the dollar, 0.89, the koruna could appreciate to 39.35 against the dollar.
Bonds were steady on Monday. In the beginning of new week, almost no prices changed except two - KB12 and MoF 6.75/05, both being in demand. The market did not even react on unusually bearish CZK FX market, and it's more likely that prices will remain stable until the beginning of the new year.
Current benchmark prices: Mof 6.75/05 99.10-40 (+10 bps), MoF 6.30/07 94.05-35 (unchanged), MoF 6.40/10 92.00-30 (unchanged)