EUR/CZK to drift slightly lower over the coming year – Commerzbank

FXStreet Insights Team FXStreet

The Czech Koruna, usually a stable currency, recently weakened sharply. Economists at Commerzbank have revised up our forecast EUR/CZK path to reflect the current weakness.

Inflation may not moderate fully to target

From current level, we expect the Koruna to recover modestly as inflation moderates. But in 2024, we do not foresee further CZK strength because inflation may not moderate fully to target, which may once again affect CNB’s credibility.

What is more, controversy has broken out between government and central bank because the latter criticises the expansionary fiscal stance for being the main culprit behind high inflation. Such developments could add volatility to the Koruna again next year if inflation were to prove stubborn like we anticipate.

Source: Commerzbank Research

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