Under the influence of the strengthening dollar, the Czech currency has been losing again in recent days. During Wednesday’s trading, it came close to the psychological level of 24 crowns per dollar, i.e. to the weakest level in two years. Around 4:30 p.m., the exchange rate was at the level of CZK 23.94 per dollar.
“The strengthening American currency is putting the currencies of the entire Central European region under selling pressure,” said Komerční banka analyst Jan Vejmělek.
“Domestic inflation numbers did not significantly affect trading. We assume that the koruna, together with the entire region, will remain rather vulnerable even in the coming sessions and will be watching in particular the nominations of the new president for the posts of Minister of Finance and Trade,” added the economists from ČSOB Finanční trhy.
Consumer prices in the Czech Republic rose by 2.8 percent year-on-year in October, thus year-on-year inflation accelerated from September’s 2.6 percent. The Czech Statistical Office published the data on Monday.
Inflation and its influence on the central bank’s decisions on interest rates may nevertheless support the Czech currency to strengthen before the end of the year.
“Concern about rebounding inflation will be a theme that will dominate the pre-Christmas meeting of the Bank Board. Bets that the Czech National Bank will take a break from cutting interest rates before the end of this year will eventually push the koruna for modest gains,” Next Finance analysts said.
Photo: TradingView, List of Reports
The US dollar is strengthening against the koruna. In the last five days, the koruna has weakened by approximately 3.5 percent. The graph shows the development over the last five years.
Fasten Your Seatbelts: The Czech Currency is on a Wild Ride!
Oh, the life of a currency! One minute you’re soaring high, feeling like a million bucks—literally—and the next, you’re nosediving faster than my self-esteem at a karaoke night. Yes, dear readers, we’re talking about the Czech koruna, which has recently decided it would much rather dance with the darker side of currency value, thanks to the really strong arm of the dollar.
Last Wednesday, the koruna inched perilously close to the psychological barrier of 24 crowns per dollar, the weakest it has been in a staggering two years! Now, for those of you wondering why anyone would care, let me break it down: if the koruna were a contestant on a talent show, it would be sweating profusely while forgetting its lines right about now.
“The strengthening American currency is putting the currencies of the entire Central European region under selling pressure,” says Komerční banka analyst Jan Vejmělek. Brilliant observation, Jan! Who knew turning your back on the crowd at a bar would yield results like this?
Domestic inflation numbers, which are rising like a loaf of bread in grandma’s oven, haven’t helped the koruna much. Inflation hit a modest 2.8 percent year-on-year in October, up from September’s delectable 2.6 percent. It’s the kind of storyline that could easily feature in a slapstick comedy: economist buries head in hands as inflation’s annual report drops in.
And while we’re at it, the esteemed economists from ČSOB Finanční trhy apparently believe that the koruna, much like a bewildered tourist in Prague, will continue to be vulnerable. They expect it to keep an eye on the nominations for the new president, especially the fresh faces vying for the finance and trade positions. It’s like a reality show where no one wants to be voted off the island!
“Concern about rebounding inflation will be a theme that will dominate the pre-Christmas meeting of the Bank Board,” say analysts at Next Finance. Yes, folks, inflation’s like that persistent uncle who keeps showing up uninvited to the holidays.
Now, the U.S. dollar has been flexing its muscles in the last week, causing the koruna to lose a comical 3.5 percent of its value. If currencies were in a gym, the dollar would be bench-pressing the koruna while the koruna struggles with the weights that are supposed to be “light.”
But fear not! Despite the current chaos on the currency stage, there are murmurs that the Czech National Bank may be gearing up for a bit of a change. The prospect of stabilizing interest rates may offer the koruna a smidge of hope—like the glimmer of a fruitcake at the back of your grandma’s cupboard. It may not be much, but we can hold onto it, right?
So, in the weeks leading up to the end of the year, keep your eyes peeled and your wallets clutched. The currency market is as unpredictable as a Lee Evans stand-up special—fast-paced, a bit chaotic, and ultimately, unpredictable!
Until next time, keep your currencies close and your sense of humor closer! After all, life’s too short to take inflation seriously.
In recent days, the Czech koruna has been under pressure, losing value as the American dollar continues to strengthen. On Wednesday, the currency approached a significant threshold, nearing the psychological barrier of 24 crowns per dollar, marking its weakest position in the past two years. As of 4:30 p.m., the exchange rate was recorded at CZK 23.94 per dollar, reflecting the ongoing market turmoil.
“The robust performance of the American currency is exerting downward pressure on the currencies across the entire Central European region,” noted Jan Vejmělek, an analyst from Komerční banka, emphasizing the broader implications for regional economies.
The recent domestic inflation figures have surprisingly had little impact on market trading trends. Economists from ČSOB Finanční trhy anticipate that the koruna, alongside its regional counterparts, will likely remain vulnerable in upcoming sessions, especially as the market closely monitors the nominations of a new president for key Ministerial positions including Finance and Trade.
In October, consumer prices in the Czech Republic rose by 2.8 percent year-on-year, showing an increase from September’s inflation rate of 2.6 percent. This data was released by the Czech Statistical Office on Monday.
Despite the prevailing inflation concerns, which could influence decisions by the central bank regarding interest rates, there remains a potential for the Czech koruna to strengthen before the year’s end.
“Concerns surrounding rebounding inflation will likely be a central theme during the pre-Christmas meeting of the Bank Board. Expectations that the Czech National Bank may pause any cuts to interest rates before the year concludes could lead to modest gains for the koruna,” analysts at Next Finance remarked.
The US dollar has been gaining ground against the koruna, with the latter weakening by approximately 3.5 percent over the last five days. The accompanying graph illustrates this currency development over the past five years.
**Interview with Jan Vejmělek, Analyst at Komerční banka**
**Editor:** Thank you for joining us today, Jan. The Czech koruna has been under considerable pressure lately, nearing the psychological barrier of 24 crowns per dollar. Can you tell us what has been driving this trend?
**Jan Vejmělek:** Thank you for having me. The recent strengthening of the US dollar is a significant factor impacting not just the Czech koruna, but currencies across the entire Central European region. This environment creates selling pressure on the koruna as investors favor the dollar.
**Editor:** We’ve seen domestic inflation numbers rising to 2.8 percent year-on-year in October, up from 2.6 percent in September. How much do you think these figures are affecting the volatility of the koruna?
**Jan Vejmělek:** Interestingly, while inflation is often a key influencer in currency valuation, it hasn’t had a dramatic impact on trading recently. The koruna seems more influenced by external pressures than domestic inflation numbers at this point. However, concerns about rising inflation could trigger reactions as we approach the end of the year.
**Editor:** The ČSOB economists mentioned that the koruna will remain vulnerable in the coming sessions. What specific events should we be watching for that could influence its trajectory?
**Jan Vejmělek:** We are particularly focused on the nominations for the new president’s cabinet, especially key positions like Minister of Finance and Minister of Trade. These appointments could shake up market sentiment and ultimately affect the koruna’s performance.
**Editor:** Looking ahead, what can we expect regarding the Czech National Bank’s approach to interest rates, and how might this affect the koruna?
**Jan Vejmělek:** There’s speculation that the Czech National Bank may pause its interest rate cuts as it contemplates the inflation situation. If they decide to keep the rates steady or signal a potential increase, it could instill some confidence back into the koruna, providing modest gains before the year ends.
**Editor:** In the short term, with the dollar’s strength maintaining pressure on the koruna, what advice would you give to those watching the currency market?
**Jan Vejmělek:** I would advise stakeholders to keep a close eye on geopolitical developments and domestic economic indicators, especially inflation trends. Currency markets can be unpredictable, so staying informed is key to navigating these turbulent waters.
**Editor:** Thank you for your insights, Jan. It sounds like we are in for quite a ride in the coming weeks!
**Jan Vejmělek:** Absolutely! It’s going to be an interesting few months for the Czech koruna. Thank you for having me.
