CZK poised for further appreciation – Danske Bank

Nicolai Ringkobing, Assistant Analyst at Danske Bank, assessed the current prospects for the Czech Koruna in the near to medium term.

Key Quotes

“The CNB kept rates unchanged at the December meeting and seems increasingly determined not to risk raising rates at too quick a pace. We expect it to raise rates in February but then wait some months before the next hike, as it seems worried about a quick appreciation of the CZK”.

“We project that the cross will hover around current levels in the short term and look for more gradual CZK strengthening over the medium term based on robust Czech economic fundamentals and relative monetary policy divergence, as the CNB seems ready to continue its hiking cycle albeit at a slower pace, while we do not expect an ECB hike before 2019.We change our 1M forecast to 25.50 (previously 25.60) but keep our 3M, 6M and 12M forecasts unchanged at 25.50, 25.30 and 25.30, respectively”.