The Slovak FX market experienced another
interesting session with tendency to break
new record highs. EUR/SKK firmed through
the 36.5 level early in the morning and hit a
new all time best of EUR/SKK 36.47.
The local unit strengthened thanks to
appetite of London names and also thanks
to the development in the neighbouring
markets, where the forint and the Polish
zloty recorded gains. However, the SKK
failed to hold its gains and returned back to
opening level of EUR/SKK 36.57 in the
afternoon. The koruna did not pay much
attention to the statement of governor
Sramko. He sees a need for tighter
monetary policy in order to curb
inflationary pressures. He also said that
EUR/SKK conversion rate may be close
to the market if koruna is stable in time of
euro entry talks.
NBS will hold its regular monetary policy
meeting on Tuesday, October 31. We expect
that rates could be hiked by 25-50 bps
despite recent currency strengthening.
Koruna should correct to EUR/SKK 36.70
this week if the level EUR/SKK 36.50 will
hold at the beginning of the week.
(CSOB - Investment research)