The Czech National Bank data on Wednesday showed that Czech current account surplus increased notably in February. The current account surplus rose to CZK 43.96 bln in Feb from CZK 32.36 bln in the prior month, well above the expected surplus of CZK 35 bln.
The surplus on trade rose to CZK 35.48 bln from CZK 31.86 bln a month ago. Likewise, primary income surged to CZK 4.74 bln from CZK 2.78 bln. The secondary income showed a positive amount of CZK 3.73 bln versus a shortfall of CZK 2.28 bln in Jan. The capital account balance came in at a positive CZK 8.73 bln compared to a nil balance in previous month.
Today’s release confirms the fact that Czech balance-of-payments remains in a strong position and it has been improving. Strong EU demand for Czech exports, lower oil prices and dividend inflows brought the 12-months cumulative Czech current account balance to the surplus standing at 1.1% GDP.
"The CNB should exit the intervention regime in May 2016. Hence, the forward exchange rates can probably fall deeper below 27.00 EUR/CZK (intervention level) much sooner" notes KBC in a research note.
