On Thursday 31st the Council of Czech National Bank decided that that the monetary intervention that is keeping the exchange rate of Czech Crown low and was to be ended during the second quarter of 2015 is to be maintained until 2016. This was to be meant as the signal that the Czech National Bank wanted the exchange rate low for the long-period of time. After the press conference the markets reacted accordingly and CZK weakened nearly to the level of 27. 70 CZK for 1 EUR. It is also expected that this year that the CZK won’t cross the line of 28 CZK because of the weak domestic inflation and cumulating of ant-inflation risks in Eurozone. Several company’s analysts say that the decision to maintain the intervention longer won’t influence Czech companies on the contrary to what its introduction did. According to the Economist’s Big Mac Index the Czech currency is undervalued as it should be 15 CZK for 1 USD and 19 CZK for 1 EUR. Czech National bank also increased its estimate of Czech GDP growth to 2.9 % but on the contrary decreased its estimate for 2015 to 3 % from 3.3 %.
5th March 2019