KBC Market Research Desk
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Czech koruna almost tested CNB’s readiness to intervene
Czech hard macro figures remain solid and CNB Bank
Board likes them as latest Minutes showed
The Czech koruna almost tested CNB’s intervention floor set by the Czech National Bank at the end of the last week. The EUR/CZK pair slipped below EUR/CZK 27.10 level on Friday afternoon so the Central Bank’s intervention looked imminent. The market could have been speculated that given the Greek referendum on Sunday and the Czech national holiday scheduled for Monday, it would be wise to test CNB’s readiness to intervene against the strength of the Czech currency. Nevertheless as showed today’s market data (on Reuters) the intervention was not necessary as the Czech koruna weakened a bit naturally. Moreover, the CNB also confirmed that the markets did not trigger its (promised) reaction. Nevertheless, given the small gap between the spot rate and the intervention floor one cannot rule that such an intervention will come later on during the summer.
The main reason is very solid Czech macro data. On Friday, there were a very strong outcome of the Czech foreign trade in May and even today’s releases of the May retails sales and industrial output were solid too. No wonder that some CNB Bank Board members stated that the renewed economic growth would probably lead to renewed real convergence of the Czech economy (to the EMU core) as Friday’s release of the latest Minutes showed.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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