Koruna Weaker After Zamrazilova's Comments

EUR/CZK went bid as comments from CNB's Zamrazilova crossed the wires, with the official indicating a shift in the central bank's discussions and flagged expectations of koruna depreciation. The rate has eased off its session peak (23.846) and last deals +0.032 at 23.811, with familiar technical levels still intact.

• CNB Deputy Governor Eva Zamrazilova told lawmakers that the central bank expects the koruna to weaken against the euro, while the question facing the policymakers now is "when it will be possible to start easing" monetary policy conditions. Zamrazilova said that the CNB "expect [the exchange rate] to weaken by about 1 koruna in the course of the year," i.e. more than implied by the latest staff forecast which implies that EUR/CZK should average at 23.88 in 4Q2023, at 24.44 in 3Q2024 and at 24.51% at the end of the monetary policy horizon in 4Q2024.
• Finance Minister Zbynek Stanjura told the Budget Committee that he was confident that the government could meet its CZK295bn budget deficit target for the year.
• CZGBs have advanced across the curve, in line with the trend in core FI markets. The local FRA curve has shifted lower.