The Czech currency moved up and down
yesterday closing just slightly firmer. The
koruna initially tracked the firming Polish
zloty, but the bullish trend reversed as the
EUR/CZK failed to break the key
28.20 resistance and as it became quite
clear (after PM’s speeches) that the
government of Prime Minister Mirek
Topolanek (Civic Democrats, ODS) cannot
win confidence. It is worth adding that the
market paid negligible attention to
Finland’s paper maker Myllykoski
announcement that it plans to invest EUR
450 m to build a paper mill in the Czech
Republic. The plant should be finished in
the summer of 2008.
Today the Czech FX market has to absorb
the fact that the political stalemate has not
finished yet. Nevertheless if the zloty is
able to keep its gains from yesterday’s
session, the koruna should not get under
significant pressure. It rather seems that
the failure of the government has already
been calculated into the assumptions of
investors during previous weeks.
(CSOB - Investment research)