CZK: Fundamentals no longer justify maintaining the EUR/CZK peg – MUFG
|Lee Hardman, Currency Analyst at MUFG, notes that the Czech koruna is already meeting their initial expectations that it has the potential to be one of the largest moving currencies this year.
Key Quotes
“The release yesterday of the latest Czech CPI report which revealed inflation accelerated sharply for the second consecutive month in December moving back into line with the CNB’s target of 2.0% has even increased the risk that the floor could be removed earlier. We no longer see fundamental justification to maintain the emergency settings of the currency floor which have helped to remove deflation risks. Market pressure will continue to intensify on the floor in the coming months which could prompt the CNB into an earlier exit as the costs no longer outweigh the benefits.”
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