BUDAPEST/PRAGUE: The Czech crown jumped to its strongest level against the euro since the central bank (CNB) removed its currency cap two months ago, supported by figures showing a surprise current account surplus in April and a buy recommendation from Citigroup.
Central European markets were generally mixed and rangebound as investors awaited key signals on global interest rate trends from the US Federal Reserve's meeting on Wednesday.
The crown was trading at 26.142 against the euro at 1109 GMT, up 0.24 percent from Monday and more than 3 percent from its former cap at 27, taking it to its highest since the cap was introduced in late 2013.
Though a firming of the local currency cuts import prices, CNB data released on Tuesday showed a 14.35 billion crown ($616.01 million) current account surplus in April, against expectations for a deficit.
Some analysts expect the crown to strengthen further.
Citigroup analysts said in a note that investors should buy the crown, with a target of 25.25.
While there is some risk that inflation will be lower than expected in the coming months, a stronger crown is unlikely to deter the CNB from tightening policy by late in the third quarter or early in the fourth quarter, they said.
The CNB demonstrated its willingness to tighten conditions, by doubling the amount of buffer reserves that domestic banks must put aside from July 2018 because of rapid credit growth.
Elsewhere in the region, the forint gained 0.2 percent against the euro, the zloty firmed by 0.1 percent and the leu eased by 0.1 percent.
Budapest's main stock index hit a record high on Tuesday, boosted by a share price rise for OTP Bank after JP Morgan lifted its target price for the stock.
OTP firmed by about 2.5 percent to a four-month high of 9,180 forints ($33.22) after JP Morgan changed its target to 12,000 forints from 9,860 forints.
"The last time we saw similar value (from JP Morgan) was in 2007," Erste analysts said in a note.
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