Koruna Heads for Worst Weekly Slide in Two Months: Prague MoverKrystof Chamonikolas
The koruna depreciated, set for its biggest weekly fall in more than two months, as prospects worsened for the Czech Republic’s export-led recovery from recession.
The currency slid to the lowest level in nine months versus the euro after data published today showed an unexpected deterioration in business sentiment in Germany, the biggest buyer of Czech exports. That adds to a surprise drop in the manufacturing and services indexes for the euro area released yesterday and concern that Cyprus bailout talks may fail.
“The series of bad news from the euro zone” is weighing on the koruna, Jan Cermak and Jan Bures, analysts at CSOB AS in Prague, wrote in a report to clients today.
The Czech currency weakened 0.2 percent to 25.848 per euro by 2:40 p.m. in Prague, extending this year’s loss to 2.9 percent. A close at that level would mark a 1 percent weekly retreat, the steepest since the five days ended Jan. 4.
“If the situation in Cyprus results in an unmanaged exit from the euro zone, the koruna may stay under pressure and attack 26 per euro,” the analysts said.