The weakening of the Slovak koruna
intensified yesterday, as political clouds
gathered over Slovakia. The unit fell again
through the central parity of 38.455. The
central bank intervened close to 38.475 in
order to support the unit and as a result the
koruna retreated to 38.30. We further
highlight the possibility of increased volatility
and the high sensitivity of the currency to
any news from the political scene.
Movements in both directions cannot be
ruled out with the upside risk to 38.55
prevailing. One thing is certain, the central
bank is watching the situation closely and is
ready to intervene in the event of a more
considerable weakening of the koruna.
Today, the koruna might be to some extent
be supported by Fed statement together with
other regional currencies.
(CSOB - investment research)