Quotes from Commerzbank Corporates & Markets:
-CZK: EUR-CZK fell sharply yesterday, closing at 27.27 vs. 27.58 on Tuesday on remarks by Czech President Zeman that FX targeting is an "experiment with the economy" and a cause of delay to Euro zone entry; Zeman promises to appoint the next CNB board with members who will not support FX devaluation.
-EUR-CZK fell because the market begins to wonder about CNB prematurely exiting FX targeting because of this pressure, which might restore EUR-CZK to the pre-intervention level of 25.40.
-We note, however, that Zeman will next appoint a member in June 2016 when Governor Singer leaves; in general, CB independence is sacrosanct in the Czech Republic - we do not see this changing - even opponents of FX targeting will not join Zeman in de-stabilising monetary policy. We still expect EUR-CZK to rise to a level which will produce moderate inflation pass-through, i.e. the 29.00 range.
