EUR/CZK: Koruna to regain lost ground over the coming months – Commerzbank
|The Czech Koruna weakened sharply after the central bank formally ended its FX intervention framework. Economists at Commerzbank analyze CZK outlook.
Broader EM sell-off and will likely reverse as and when the market switches back to risk-on
The end of the FX intervention regime should not make much difference because no intervention was being used in recent months to begin with (it was last used in October 2022). We have a different interpretation from commentators who viewed the change to mean that CNB has decided to ‘accept a weaker exchange rate’. We found the CZK sell-off puzzling and kneejerk – and we forecast the currency to regain lost ground over the coming months.
There is not a lot of idiosyncratic Koruna weakness to explain in recent days. The weakness versus the Euro was partly a reflection of the broader EM sell-off and will likely reverse as and when the market switches back to risk-on.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.