The Czech koruna weakens in Monday trading and closes at 28,40 CZK/EUR. The move is in-line with closing on other regional currencies. From the CR, the most important news are about new budget draft for 2007. New minister of finance Tlusty expects the deficit of central state budget in 2007 at 101-127,6 bln. CZK. This indicates the fiscal deficit to be at 4,6 % of GDP, which rules out entering the ERM-2 in previous target date. This would definitely send a negative signal to investors and could influence the CZK in the long term. Other point is possible rating outlook downgrade because of excessive deficits, which is obviously a risk now.
The koruna have lost against the US dollar, too. The rate CZK/USD closed at 22,33. The USD trades weaker against the euro, but the move is not so big to offset the CZK weakening agaist the euro.