The Czech currency decoupled from the
profit taking move that occurred in other
regional markets. The koruna firmed despite
the information that the second biggest
foreign investment planned in the Czech
Republic this year from Myllykoski of Finland
will be located in Germany. Myllykoski said it
will shift the CZK 13 bn paper mill
investment to Germany because of a
delayed and uncertain approval process in
the Czech Republic.
Hence, actually there was no event that
plausible might explain the drop of the
EUR/CZK pair to the 28.25 level. Some may
argue that koruna gains were a result of
profit taking on carry trades in neighbouring
markets for which the koruna can be used
as a funding currency. We have no evidence
for this theory though.
The Czech economic calendar is blank
today and other countries in the region won’t
publish any crucial data either. So, we
expect calm trading today.
(CSOB - Investment research)