Slovak markets reacted negatively on political news

The Slovak markets reacted negatively on the news that Smer started negotiations with two opposition parties nationalist SNS and Meciar’s HZDS. Koruna dipped by 0.4 percent (or to 6 month low) after Mr. Fico downplayed possible coalition with the centre – right parties SMK and KDH. The leftist leader said that coalition with Christian Democrats (KDH) and Ethnic Hungarians (SMK) is not the most attractive option for him. SDKU leader Dzurinda started parallel negotiations with his previous right wing allies KDH and SMK. However, these three parties do not have enough seats to form majority government. President Gasparovic said he expects that the new ruling coalition will be formed from former opposition parties and one party from current government. Today, the coalition talks should continue with the right–wing parties. The ecocalendar is empty. Therefore, koruna should be very touchy and vulnerable to the news from the political scene or from the external environment. The EUR/SKK 38.250 was hit on Tuesday. We expect further depreciation towards EUR/SKK 38.400.

ČSOB Investment Research