The Slovak koruna dipped from the
opening EURSKK 37.59 to 37.70. It tried to
erase some early losses but experienced a
second wave of selling in the late afternoon.
The losses are caused by the capital outflow
from the CE-4 markets. There are no
domestic market specific factors at this
stage, as the koruna is merely following the
regional trend. The government’s regular
session could be in the centre of attention
this week as we are in the middle of the
preparations of the 2007 state budget.
The cabinet approved the 3% public finance
deficit ceiling as the key parameter for the
budget last week. However, more details are
needed to judge the credibility of the budget
draft as much of the pre-elections promises
were still not included. A NBS meeting is
scheduled for Friday and we (and the market
too) expect a ‘no change’ decision. But the
monetary body will probably delivery some
hawkish comments. Today, we expect
further SKK losses towards 37.80.
(CSOB - Investment research)