The Slovak koruna was hit by a wave of sell-offs that swept regional markets yesterday. Nevertheless, the unit started to recover after weakening to 37.90 and finished the day at 37.79. Today, we don’t see major changes in the overall trading pattern. Due to the dominance of regional and international factors, the release of the May state budget data will have little effect on the market. Vulnerability of the koruna will remain high given the uncertainty related to upcoming elections. If the situation stabilises, the currency should retreat to slightly stronger levels, however we don’t expect it to become stronger than 37.60. But if the turbulences continue, there is further risk on the upside.
(CSOB - Investment research)