Investiční bankovnictví (Komerční banka)
Currencies  |  January 11, 2013 16:09:00

Crown of the week lost more percentage

Czech currency against the euro during the last five days has deepened losses and at the end of the week it traded at 25.60 CZK / EUR. It is most expensive during the week one euro sold for 25,751 crowns.

Domestic currency support macroeconomic indicators, which have been published numerous. The overall picture did not change. Data reassured markets that the Czech economy suffers from very weak domestic demand, which is no longer able to compensate for or interest in Czech goods from abroad, and operates in an environment of declining inflation.

Data on foreign trade only surprised at first sight when the detailed structure showed a significantly worse performance imports, which is associated not only with weak consumer demand, but also testifies to the concerns of domestic enterprises.This is confirmed by the data for the November industrial production and retail sales. Both numbers lagged significantly behind market expectations. Unflattering situation of enterprises is also reflected negatively on the development of the labor market. Lack of job creation leading to increasing unemployment. The inflation rate then gradually slows down towards the end of last year was 2.4%. The corrected component indicates negative demand pressures in the economy.

From the perspective of CNB are clearly inflationary data. The threat of escalating deflationary pressures are increasing. During this year, inflation is expected according to our forecasts hold above the inflation target in 2014 should, however, its central bank to significantly podstřelovat. It will be so interesting if the Board decides to further ease monetary policy.Practically every central banker since we heard that another tool will exchange interventions, however, is not at all clear when they actually reaches CNB. Board itself is not uniform in the timing. At current levels, we now seem unlikely intervention. At the same time we see no reason why it should crown reinforce, rather we can not exclude that it could continue to weaken. Denouement would rather could come in mid-year. Analysts' estimates and our colleagues from SG indicate some recovery in the euro area in the second half of this year. If better data with these came a significant strengthening of the koruna and taking into account our estimate of average inflation for 2014 at 0.9%, we are livelier debates about foreign exchange intervention and wait for the end of this year.

The very next week we will see the December industrial producer prices, which should fall by 0.1% m / m, respectively, an increase of 1.4% y / y (market 0.1% m / m, respectively. 1.6% y / y). An interesting view on the price development in agriculture that have an immediate impact on food prices in the consumer basket. Friday will be published current account balance for November, where we expect a deficit of CZK 10 billion (-8.4 billion CZK). Impact on financial markets, however, should be minimal.

The crown will be in the next week influenced by developments in global markets. Given the relatively sharp depreciation of the koruna from the beginning of the year and the development of the USD / EUR for the next week we expect a possible correction of this year's losses. It should not be a lasting trend.

Author: Miroslav Frayer

Tyto zprávy pro vás vytváří Investiční bankovnictví KB.
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