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Koruna Loses Shine, Czech Finance Ministry Downgrades Economic Outlook


EUR/CZK has crept higher this morning and last sits +0.041 at CZK23.807, moving away from 14-year lows printed yesterday at CZK23.755. A clearance of the 50-DMA (CZK24.166) is needed to give bulls hope for a firmer rebound. Bears look for renewed losses towards Oct 30, 2008 low of CZK23.700.

  • Central bank officials reaffirmed their well-documented views in the latest round of interviews. Hawkish dissenter Tomas Holub expressed preference for higher interest rates, which he said would help contain inflation faster. By contrast, Deputy Governor Eva Zamrazilova told E15 that another rate hike wouldn't lead to a significantly faster cooling in price growth, adding that "the main inflation pressure is behind us." She predicted that interest rates will need to remain higher for a longer time.
  • The government downgraded its economic growth projection for 2023. The Finance Ministry now expects GDP growth to be -0.5% Y/Y this year (prev. -0.2%), with current account deficit seen at 3.6% of GDP (prev. 5.3%).
  • The presidential campaign remains in focus on the eve of the election run-off. Candidates will face off in the final debate tonight.

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