It is according to the month that the koruna traded at the strongest values since 2008. Since then, the exchange rate has gradually weakened, and has deviated from the development of other currencies in the region. In the last few days, the crowns managed to erase the damage. Why doesn’t it strengthen vc? And will we reach the strongest level again in fifteen years?
Among the main factors of the koruna’s strength during the first quarter of the year were the differential, the psychological effect of the Czech National Bank’s intervention, the investment of speculative short positions, the strong demand for euro bills, which were subsequently converted into korunas, and, finally, the better-than-expected entry into the new year by customs European economy. In the course of time, the bag dropped to the floor. Some factors disappeared, significantly weakened the fall, others increased again.
years differential composition tilted in favor of the crown. It is indeed a currency, and compared to the Eurozone, it will decrease accordingly, even if it is stronger. There are no short deposits. The interventionist regime continues, although there is no indication that it should end soon. If we were to use the recent rhetoric of NB bank council member Tom Holuba, the interventions are indeed a “free child”, but his mother does not yet give him up. At least the comments from the banking council do not suggest that.
Srie Makro was surprised by the changes. The index of the Citi company, reflecting the passage of data compared to the consensus, is gradually increasing in the case of the euro, which took away the wind from the sails of the euro and crowns. We then observe a noticeable weakening in the demand for euro coins. Trade volumes are gradually decreasing, and there are some rumors that companies are not so hungry for euros after the uptick in the banking sector. In addition, there was speculation about a possible tightening of bank supervision by the NB, which could tighten euro standards. Who wanted euros, got them. He licked them, and then he didn’t need dal. It turns out that this factor was one of the particularly strong ones with an impact on the exchange rate in the first quarter.
In addition, the factors of nov. With the absence of demand for crowns from exporters using euros, the speculative capital, sensitive to foreign countries, has once again increased. Here we put a price on the American one having an effect on the dollar exchange rate and the thorn rate. The dollar strengthened on all fronts due to nervousness around the debt ceiling negotiations. Then a number of American nominal and real market rates were added, and it was clear that in the German region it is the koruna that suffers the least in this environment.
The exchange rate eventually stopped weakening, and the dog, according to the rising American spike in interest rates, added profits together with the region. One of the factors of the stronger koruna is the current speculation about NB rates. At the May session, we witnessed a change in the ratio of those voting for you rates. They were cut from one councilor, some of them even proposing to increase the rates by half a percentage point. After the introduction of the government package, which should have an anti-inflationary nature in case of drinking, among the main risks of your domestic interest rates is the inflation rate. These can put pressure on the growth of nominal wages, which will then be reflected in the final prices of companies. However, more data will be needed to make a final decision whether to live or not, especially with regard to the rate of wage growth announced at the beginning of the year.
We currently favor a rate stability scenario at 7% (as other alternative scenario forecasts have shown), but with a much longer duration, the markets will not expect it soon. In the long term, we assume that the NB will raise rates in the fourth quarter, so the possibility of an increase at the beginning of the fifth year cannot be ruled out. A mole of crown rates, do not start it soon dream of rates, on the contrary, work with the insight of your rates for a long time. We can see a dream year on the long horizon, which we believe is one of the reasons for the stronger crown. At the same time, we respect that this insight is too small for a prominent crown envoy.
In order for the koruna to strengthen accordingly, there would be a need for surprises in the domestic environment, for example in the form of foreign rates, which the market does not appreciate. For now, however, we look for more arguments in vain. From external factors, a calming situation around the debt ceiling, or a halt in the growth of market rates, would help. Even if all these conditions are fulfilled, however, we do not expect that the koruna could move back to the strongest values since 2008, which it reached in the second half of April. Currently, we see that the exchange rate has crossed the border of 23.60 per euro, and if it were to break through, we are watching for support at 23.50 per euro. That’s about ten hals less than a year’s worth of crowns.
On the contrary, in our view – especially in the second half of the year – factors will increase, increasing the risk of a slight weakness of the koruna. Due to the rising differential against the euro, falling inflation and possibly the continued absence of strong demand for euro coins, the combination is maintaining the exchange rate in the range of 23.50 and 24.00 per euro. And if the speculation about the end of the intervention were to hit the US nominal and real interest rates, we cannot rule out the outflow of the sensitive speculative capital, moving the exchange rate above the upper limit of the so-called letter.
Jan Berka, Roklen Holding
An expert’s views on the future development of selected foreign markets monitored by means of an index and compared with the Czech capital market (PX) in the horizon of one month and a half year, in the week from 22/05/2023.
Expert estimate for the equivalent of 1 MSc
| Pointer | Amount 19. 5. | Avg | Medina | Change in % | Interval | growth | Decrease |
| PX | 1,316.80 | 1 308 | 1,325 | ↓ -0.64 | 1,100 – 1,400 | 5 | 1 |
| Dow Jones (US) | 33,426.63 | 33,350 | 33,800 | ↓ -0.23 | 30,000 – 35,000 | 5 | 1 |
| NASDAQ C.(US) | 12,657.90 | 12,783 | 12,950 | ↑ 0.99 | 11,100 – 13,500 | 5 | 1 |
| FTSE 100 (UK) | 7,756.87 | 7,495 | 7,585 | ↓ -3.38 | 6,800 – 8,150 | 3 | 3 |
| DAX (Num.) | 16,275.38 | 15,258 | 15,200 | ↓ -6.25 | 14,200 – 16,300 | 1 | 5 |
| Nikkei 225 (Japan) | 30,808.35 | 28,550 | 28,925 | ↓ -7.33 | 26,500 – 30,850 | 1 | 5 |
Expert estimate for the equivalent of 6 months
| Pointer | Amount 19. 5. | Avg | Medina | Change in % | Interval | growth | Decrease |
| PX | 1,316.80 | 1 331 | 1 303 | ↑ 1.07 | 1,150 – 1,500 | 3 | 3 |
| Dow Jones (US) | 33,426.63 | 34,433 | 34,650 | ↑ 3.01 | 31,000 – 36,700 | 5 | 1 |
| NASDAQ C.(US) | 12,657.90 | 13 133 | 13,300 | ↑ 3.76 | 11,000 – 14,400 | 5 | 1 |
| FTSE 100 (UK) | 7,756.87 | 7,850 | 7,750 | ↑ 1.20 | 7,500 – 8,550 | 3 | 3 |
| DAX (Num.) | 16,275.38 | 15,667 | 15,750 | ↓ -3.74 | 14,500 – 16,400 | 2 | 4 |
| Nikkei 225 (Japan) | 30,808.35 | 28,917 | 28,550 | ↓ -6.14 | 26,900 – 31,000 | 1 | 5 |
Evaluated this week by:
- Libor Stoklsek – AlgoImperial
- Jan Nmeek – BH Securities
- Tom Pfeiler – CYRUS
- Marco Marinucci – Generali Investments CEE, investment company
- She Zendulka – Kurzy.cz
- But Charvt – UniCredit Bank Czech Republic and Slovakia
The tables contain a summary of the expert’s estimate in the list. The column “Actual value” indicates the value of the monitored index (question closing value), from which the experts based their estimates. With this value, the expert’s estimates will be compared after the equivalent of one or six months have passed to evaluate the possibilities. “Median” is a word that averages the estimate based on the size of the set file and “Interval estimate” indicates the minimum and maximum estimate of the file. In the “Growth/Decline” column, indicate how many experts expect that the index will rise or fall in the considered period relative to the current values.
Note: The estimates are in the form of unweighted views with regard to the expected development in the fifth one month and a half year. The reality, however, differs significantly from the expert’s estimate. Experts and Kurzy.cz do not take any responsibility for these differences.
