Koruna Edges Higher, FinMin's Macro Forecast Under Scrutiny

EUR/CZK changes hands -0.022 at 24.059, despite moving away from session lows. From a technical standpoint, a swing past the 200-DMA at 23.841 are needed to open up scope for further losses. Conversely, topside focus falls on resistance area around the 24.3 figure.

• Czechia's Finance Ministry has downgraded its outlook for Czech GDP and now expects a 0.2% Y/Y contraction this year (versus +0.1% in the previous forecast), due to a larger-than-expected decline in household consumption. The economy is now expected to grow 2.3% Y/Y in 2024 versus +3.0% previously, as the government's fiscal consolidation package will dampen economic activity. Finance Minister Stanjura reaffirmed his conviction that the fiscal deficit target for this year would not be exceeded.
• CSOB reaffirmed their expectation that the CZK will be weaker and more vulnerable after the CNB formally ended its FX intervention regime. They expect a gradual move in EUR/CZK towards 24.30 at the end of this year. In their view, selling pressure on the koruna should intensify in early 2024, pushing the rate to 24.60, amid a narrowing interest-rate differential with the EZ/US. Improving domestic economic fundamentals should allow EUR/CZK to stabilise around 24.50 in 2H2024.