The Czech koruna is still pushed down and breaks through the 28,50 level. Today closing of the CZK/EUR rate was at 28,52. Other currencies in the region firmed, but this only helped the koruna to slow down the fall. Main negative factor is local state budget. The deficits in the next years will make almost impossible to fulfill the euro adoption criteria. Possible rating downgrade and investors´s sentiment are also in stake. Today, Czech central bank vicegovernor Niedermayer again criticized the budget draft for 2007, which underlines the problem.
The koruna ended trading at 22,50 against the dollar, while the USD/EUR market stayed quite stable over the day.
Tomorrow, the retail sales and PPI numbers will be released in the CR. We don´t expect any important impact on the FX market.