Commerzbank note in June, the Czech......>

EURO-CZECH: Commerzbank note in June, the Czech koruna gained ground against

both the euro and the US dollar and is currently trading at levels around CZK

25.50 per EUR. The shift of the major central banks such as the Fed and the ECB

towards (further) monetary easing made the Czech central bank (CNB) appear all

the more restrictive. Finally, CNB Governor Jiri Rusnok described the risks as

balanced in his statement at the most recent meeting at the end of June and did

not explicitly rule out an interest rate cut or a further interest rate hike.

Further bad news regarding the ongoing trade dispute, especially in the case of

US car tariffs, could lead to EUR-CZK going up again. However, as we now expect

the ECB to cut interest rates as early as end-July, the CNB is likely to

continue to act more restrictively than the ECB, which in turn is CZK positive.

We are therefore sticking to our previous EUR-CZK exchange rate forecast.