EUR/CZK expected at 26.00 in 6-month – Danske Bank

Analyst at Danske Bank Aila Mihr sees the Koruna around 26.00 per Euro in the medium term.

Key Quotes

“Following removal of the floor, EUR/CZK volatility has been much lower than expected and the cross mostly stayed within a 26.5-27.0 range”.

“In the short-term, we expect EUR/CZK to continue trading around current levels, with occasional spikes higher, as the CNB remains in wait-and-see mode and covering of sizable short EUR/CZK positions prevents significant CZK appreciation”.

“Over the medium-term we still look for more gradual CZK strengthening based on robust economic fundamentals, a current account surplus, REER undervaluation as well as relative monetary policy divergence as the ECB continues its easing measures whereas we expect the first CNB rate hike in Q4 17”.

“We leave our forecasts for EUR/CZK broadly unchanged, targeting the cross at 26.50 in 1M, 26.30 in 3M (26.00 previously), 26.00 in 6M and 25.50in 12M”.