The Czech koruna stayed strong on
Tuesday, due to the apparently neverending
positive sentiment in the whole
Central European region. Mainly strong
gains of the Hungarian forint and the Slovak
koruna enabled the Czech currency to move
towards EUR/CZK 27.90. The markets more
or less ignored the October industrial
production data that exceeded market
expectations.
In real terms, production grew by 12.8% y/y,
but it was significantly influenced by two
more working days compared to last year’s
October. After adjustment for this effect,
production grew by 8.7%, which is also
considered as an excellent result. The
Czech industry is still doing very well
primarily thanks to the continuing expansion
of the automotive and electrical industries.
The development of export-oriented
companies under foreign control (75% of
revenues are generated from exports) is
positively reflected in the performance of the
entire sector and of the Czech economy as a
whole.
Today the koruna should stay strong due to
the positive reaction of the global bond
markets on the FOMC meeting. Also the
current account figures might come out
above market expectations, which could
provide further support for the Czech
currency.
ČSOB - investment research