Koruna On Front Foot, CNB Matters Under Scrutiny

EUR/CZK trades -0.026 at CZK23.975, gravitating towards session lows and a 12-year trough printed yesterday at CZK23.927.

• In the grand scheme of things, the Koruna remains in an appreciation trend, which removed the need for CNB interventions in November and (likely) December. Latest data from the central bank showed that a firmer exchange rate chewed into the value of its notoriously sizeable stockpile of foreign reserves last year, facilitating the CNB's largest-ever annual financial loss.
• CZGB yields are generally higher across the maturity curve amid weakness in the broader FI space. The PX index has oscillated between gains and losses, printing a new cycle peak in the process.
• CNB Deputy Governor Zamrazilova told Seznam Zpravy that the central bank would not raise interest rates preventively, adding that she expects rates to stay unchanged through the rest of the year. The official said she expects inflation to decline to the upper end of the CNB's tolerance band in a year.
• The focus in Czechia turns to December CPI data and a debate with three leading candidates in the presidential election tomorrow.