Despite firming Hungarian forint, the Czech
currency closed unchanged at the EUR/
CZK 28.22. Hence, the market remained in
wait-and-see mode ahead today CNB’s
EBC’s board meetings.
The market does not expect either ECB or
CNB should change its base rates, hence
press conferences of ECB’s President
Trichet and CNB’s Governor Tuma will be in
center of attention. As concern Tuma
comments, we especially focus on his
opinion related to the FX rate. The koruna
established a new all-time high following
July’s 25 bps rate hike, so it is still the main
obstacle for more aggressive monetary
tightening.
On the other hand, the key
prominent of the dovish wing within the Bank
Board Jan Fraint said that the CZK firming
was not dramatic. This might indicate that
the Board is not afraid that the strong
currency could hurt the economy and might
more concentrate on the inflation outlook,
which is less rosy. All in al we expect a
neutral stance from Tuma, which could
have in conjunction with the expected
comments from ECB Trichet have a
neutral impact on the koruna.
(CSOB - Investment research)