The Slovak koruna climbed to new all time
highs versus the euro on Wednesday, but
retreated later in the day. The exchange rate
hit the EUR/SKK 36.001 in the morning
despite the worse then expected industrial
production data. However, investors decided
to take their profits later on and the unit
eased to EUR/SKK 36.140 resistance. That
was in line with regional developments. The
Koruna is a good carry currency with good
fundamentals and relatively high interest
rates.
Today, the retail sales and wages are
on the agenda for release. However, we
think it should influence the currency only in
the case of a big difference from market
expectations. The U.S. data and regional
sentiment should be more important for SKK
on Thursday. A break through the level of
EUR/SKK 36.140 might open room for more
losses towards EUR/SKK 36.50. More
importantly, CPI and foreign trade data will
be reported on Friday morning.
(CSOB - Investment research)