Investiční bankovnictví (Komerční banka)
Currencies  |  November 01, 2012 16:35:00

Crown responds to a press conference CNB strengthening


Crown earlier today gradually lost with how the market is preparing for the afternoon session the central bank. She eventually its decision on rates and subsequent conference even one hour delayed.

CNB decreased by a vote of 5-2 main 2W repo rate by 20 bps to 0.05%. The other 5 bb also reduced the discount rate and Lombard rate fell by 50 bps to 0.25%. The decision itself was too crown react when this step is gradually zakalkulovával prices in the market during the week. The crown is then stabilized for a short time near the border 25.20 CZK / EUR. Press conference crown ultimately significant reaction caused when the domestic currency against the euro firmed sharply by almost 10 cents. This is most likely related to a commentary by Governor M. Singer refused to comment on the debate on foreign exchange interventions.This could indicate that the Board did not find yet a consensus on how to proceed in such a case. It also may indicate also that apparently the right time has not yet come to intervention by central bankers and the current level of more or less satisfied. Yet at the press conference it was said that the central bank has decided to suspend the sale of part of the proceeds from investment reserves. It wants to limit any appreciation pressures on the crown and it is clear that the exchange rate channel will be another tool for the management of monetary policy, the CNB.

New macroeconomic forecast has undergone major changes in GDP forecasts for the next two years. In 2013, the economy should grow by only 0.2% (the previous prediction of 0.8%) in the next year would then reclaim the Czech Republic was 1.9% (2.5%). It is virtually in line with our updated forecast.According to the CNB is the expected macroeconomic developments consistent further decline in market interest rates and growth in 2014. At the same time M. Singer said that the central bank will keep rates at such low levels in the long term, never rise significantly until inflationary pressures. Risks projections are broadly balanced, high uncertainty as being primarily about government consolidation measures.

Overall, today's meeting us in greater surprise. However, we waited more comments on possible foreign intervention and according to market response can be read, even calculated the market rather stronger rhetoric against the domestic currency. We count in our forecast, with unchanged rates until at least the end of 2014, which is in line with the view of the CNB.Another instrument of monetary policy should be foreign intervention, which would be the central bank could proactively by us in the event that the crown quickly solidifies below their season high for 24.40 CZK / EUR.

Money market rates have already responded to the actual decision to change rates. The yield curve fell along its entire length, a significant decline we observed on the shorter end.


Author: Miroslav Frayer

Tyto zprávy pro vás vytváří Investiční bankovnictví KB.
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