Macroeconomic Forecast The Czech Republic

The Czech Republic's currency, the koruna has increasingly proved its mettle against the backdrop of investor risk aversion stemming from the eurozone crisis. As a result, we are affirmed in our bullish outlook for the Czech koruna. This view is underpinned by the continued strong export performance on the back of supportive external demand, particularly from Germany, and our expectation for the central bank to begin tightening monetary policy this year. As such, we target CZK23.60/EUR by the end of 2011, from CZK24.36/EUR at one point on July 22.

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