October trade deficit (CZK 16.4bn) was the deepest since the beginning of 2000. The value is even the highest in comparison with the same months of previous years. Imports and exports grew by 45.4% and 35.7%, respectively, year-on-year.
October trade balance reached surprisingly high deficit. An average expectation amounted to CZK 10bn. The factors behind the unexpectedly high trade deficit are high import prices of mineral fuels and an increase of imports due to the economic recovery in the Czech Republic. On the other hand, a positive economic development in the EU countries and countries of the Central and Eastern Europe help to boost Czech exports (35.7% increase in October 2000, year-on-year). However, this factor can’t compensate an impact of factors mentioned above. According to up-to-date figures we have increased our trade balance deficit forecast for 2000 to CZK 133 bn.
The Czech koruna dipped slightly on the back of worse-than-expected October trade deficit, but returned to late Monday level in the afternoon. Koruna closed at 34.68 CZK/USD. Against the US dollar koruna fell to 40.91.
Tuesday was another quiet day for bonds. Morning trade balance figures pushed prices lower, however soon they recovered during the day and closing prices are pretty much the same as Monday's ones. Not many trades have been done, despite unusual volatility on IRS market, which jumped up as much as 10 bps on the long part of the yield curve in the morning. MoF 6.30/07, MoF 6.40/10 and EIB 8.20/09 have the issues most traded.
Current benchmark prices: MoF 6.75/05 98.60-90 (-15 bps), MoF 6.30/07 93.50-80 (unchanged), MoF 6.40/10 91.45-75 (-5 bps).