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CZK Gains Strength as CNB Ready To Do Whatever It Takes To Protect The Koruna

CZECHIA
  • We have seen recently that the risk off environment has not been impacting CZK, while selling pressure on HUF and PLN has been extremely elevated.
  • After remaining steady in the past month, CZK appreciated sharply in today’s trading session, with EURCZK breaking below its 100DMA support line to hit a local low at 24.58.
  • Czech Republic remains the safest country in the CEE based on the fortress of international reserves (relative to the country’s GDP), currently standing at nearly 70% (vs. 20%/40% for most of EM countries).
  • Today’s data on international reserves showed that CNB sold the equivalent of 3.7bn USD in May interventions, implying that the central bank is ready to do whatever it takes to protect the currency.
  • Next support to watch on the downside stands at 24.53 (76.4% Fibo retracement of the 24.09 – 25.94 range), followed by 24.50.

Source: Bloomberg

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