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New Coalition Government Likely To Support EU in Imposing Sanctions Against CEE Peers

CZECHIA
  • Yesterday, Czech government shortened quarantine and isolation for people that test positive for Covid-19 to 5 days from current 14, as of next week, to avoid a labor shortage (BBG).
  • The new five-party coalition government is likely to support EU in imposing sanctions against CEE peers (Hungary, Poland) over primacy law.
  • CZK is the least risky currency in the CEE region, while political uncertainty has been weighing on HUF and PLN in recent months. As a result, CZK has been testing new all-time highs against PLN and HUF recently.
  • In addition, the policy divergence relative to the ECB has been strongly supporting the koruna against the Euro; EURCZK broke below the key level at 24.77 and is gradually approaching its next support at 24.50.

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