Regional Overview
Macro, FX & Rates: CNB continues to intervene
(CZ FX) After some relief in the previous two days, EURCZK forwards strengthened again on Tuesday which might indicate stronger intervention activity. For example, implicit one year CZK deposit rate is seen below 1%. Data from the Czech National Bank (on free liquidity & open market operations) show that interventions against appreciation of the koruna in early January could already have exceeded volume of euros bought at introduction of the regime back in November 2013 (for the recent development see the chart below).
Although further developments are hard to predict, we believe that the inflow into korunas may again grow significantly in late March (due to the upcoming end of the hard commitment to intervene as well as CNB meeting scheduled for 31th March). As a result, forward exchange rates may theoretically slide even deeper below CZK 27.00 per EUR. Nevertheless, we cannot even rule out that they may temporarily weaken in the meantime when, for some reason, foreign investors' demand for the koruna wanes (for example, because of rising US yields or closing out too long positions in korunas, etc.).
LAST | PREVIOUS | PREVIOUS CHANGE (%) | |
EURCZK | 27.02 | 27.02 | 0.00 |
EURHUF | 307.6 | 307.4 | 0.07 |
EURPLN | 4.367 | 4.363 | 0.10 |
LAST | PREVIOUS | CHANGE (bps) | |
CZGB 10Y | 0.308 | 0.309 | -0.1 |
HUGB 10Y | 3.44 | 3.44 | 0.0 |
PLGB 10Y | 3.62 | 3.62 | 0.0 |
LAST | PREVIOUS | CHANGE (%) | |
PX | 923.3 | 923.3 | 0.00 |
BUX | 32782 | 32782 | 0.00 |
WIG | 53583 | 53583 | 0.00 |
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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