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UniCredit Expect EUR/CZK to Settle at Around 25.0 in Q4

CZK
  • A front-loaded rate-cutting cycle may keep the CZK exposed to further weakness in the short term, but an upward shift in the CZK yield curve beyond a six-month horizon could limit the room for EUR/CZK to rise further, UniCredit write in a note.
  • They expect that after peaking at around 25.3 in March, EUR/CZK will gradually firm from 2Q24 and settle at around 25.0 by 4Q24. Risks to this outlook are primarily related to external factors, such as a stronger USD and sustained weakness in the European car industry, they note.
  • Assuming the CNB aims to keep real rates in positive territory and maintain a premium relative to EUR rates, UniCredit forecast the two-week repo rate at 4.0% by December 2024 and 3.75% by March 2025.

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