EUR/CZK: Koruna stuck despite favourable fundamentals
EUR/CZK: Koruna Stuck in a Range Despite Favorable Fundamentals
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The koruna seems to be trapped in the 23.60-23.90 EUR/CZK band and nothing is likely to change even during the summer.
However, we remain positive on the koruna, which should benefit from the Czech National Bank's hawkish rhetoric, the highest beta against EUR/USD within the CEE region and the market's light positioning. Together, these should help it to stronger levels for the rest of the year.
The CNB remains the most hawkish central bank in the region despite the rapid decline in inflation. The market is pricing in a 100bp rate cut by the end of this year. We expect the first cut in November with the risk of a delay until the first quarter of 2024.