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Czech Republic Removes Euro Cap, Crown Stable


Czech Republic Removes Euro Cap, Crown Stable

The Czech Republic removed the cap on the currency, the crown, against the euro last Friday as inflation was seen under control and the cap no longer necessary. The Czech National Bank had kept the crown at less than 27 to the euro since 2013.

The volatility after the action was rather muted and is seems the crown has found a natural level. Reuters reported, It has seesawed between 27.252 and 26.556 against the euro, even though some analysts expected bigger moves beyond 26 and 28. After an early weakening, the crown firmed 0.4 percent to 26.561 by 0922 GMT in low turnover, while the zloty firmed 0.3 percent. One dealer said 26 could be a “magic level” as that would already be high enough gain for big crown holders to step in.

Reuters reports, It has seesawed between 27.252 and 26.556 against the euro, even though some analysts expected bigger moves beyond 26 and 28. After an early weakening, the crown firmed 0.4 percent to 26.561 by 0922 GMT in low turnover, while the zloty firmed 0.3 percent. One dealer said 26 could be a “magic level” as that would already be high enough gain for big crown holders to step in.

“Whereas we would project volatile movements and no linear appreciation trend throughout Q2 and Q3, the overall trend until year-end should bring appreciation of CZK toward 26 against the euro,” Raiffeisen analyst Wolfgang Ernst said in a note, reports Reuters.

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