CNB unlikely to remove currency floor

Yesterday CNB's Singer stated that extending the FX policy beyond 2016 is 'definitely a possible scenario'. This seems a strange thing to say at this point in time, given that GDP surprised to the upside in Q2 and CPI trends are going in the right direction. Basically, the rationale for having the 27.00 floor is no longer as compelling as it once was. In this respect CNB are seemingly making exactly the same mistake as the SNB did in December of 2014, when they implemented negative deposit rates as a last attempt at weakening the franc. 

"Likewise, the more the CNB have to talk about further potential measures to weaken the koruna, the more likely it becomes that the market will test their resolve. To be clear, we don't see CNB removing the floor in the immediate future, but such comments are certainly disconcerting", says Commerzbank.