On Tuesday, the exchange rate of the Czech currency to the euro hovered around 25 crowns and 40 pennies per euro. Since the beginning of September, the crown has weakened against the European currency by roughly 40 pennies. It lost even more significantly, almost by a crown, in the same period against the American currency. The dollar is currently sold for 23 crowns and 50 pennies.
According to Roklen analyst Jan Berka, the development of the rates is related to the fact that even before the American elections, the markets count on the victory of the Republican candidate Donald Trump, even though he is leading only very narrowly in the pre-election polls.
Shares of Trump’s media firm rise as investors bet on his victory
US elections
“We saw it in the strengthening dollar and the rising yields of US government bonds, especially those with the longest maturities,” Berka told Novinkám. According to him, if this mood betting on Trump in the market is maintained, it will be a factor of possible weakening for risky currencies, including the Czech crown.
It will depend on how clearly the presidential election turns out. If Trump wins and the Republicans win the entire Congress, further strengthening of the dollar and rising US yields cannot be ruled out. “Donald Trump’s outright victory would open the way for the koruna to weaken towards 26 crowns to the euro and above 24 crowns to the dollar,” said Berka.
Photo: ČTK/AP
Donald Trump and Kamala Harris in a televised pre-election debate
The victory of Kamala Harris could, on the contrary, bring relief to risky currencies in the form of at least a short-term weakening of the dollar. Speculators would quickly collect dollar profits, which could help the koruna to at least the level of 23 crowns per dollar and towards 25 crowns per euro, the economist estimated.
In the following months after the elections, however, he expects stabilization of the markets and rather bets on the strengthening of the dollar, since the American economy is doing better than the economically dying eurozone.
For example, Creditas economist Petr Dufek would buy some vacation dollars to be safe now, but he is not afraid of a dramatic weakening of the koruna after Trump’s victory.
“Rhetoric before the elections is one thing, practical steps after the elections are another. So markets can be euphoric in the short term but sober over time. The dollar may be on the horse for a while, but in the end the numbers from the economy and the policy of the Fed will decide,” added Dufek.
In addition to buying dollars for trips to the USA or exotic destinations, it is not a bad idea to exchange some euros for a ski vacation in Europe.
“If Donald Trump wins, the koruna could weaken slightly towards CZK 25.60 per euro,” estimated Česká spořitelna economist Jiří Polanský. If Kamala Harris wins, she expects a possible strengthening of the crown to close to 25 crowns per euro.
UniCredit Bank economist Pavel Sobíšek, unlike others, dares to estimate that just after the American elections, the koruna may strengthen slightly, regardless of the result, because nervousness will subside from the markets. On the contrary, he agrees with other economists that a close or tie result would not be good news for the crown.
In view of Trump’s victory, Europe has an economic nightmare
Economic
Sure! Let’s dive into this interesting spectacle of currency fluctuations, political drama, and a sprinkle of economic forecasting. Cue the theatrical music!
Currency, Elections, and a Dash of Drama: The Czech Crown Takes Center Stage!
Ladies and gentlemen! Gather ‘round as we embark on a thrilling rollercoaster ride through the world of foreign exchange rates, where the Czech crown is dancing the tango with the euro and dollar—one moment spinning gracefully, the next stumbling over a poorly timed political forecast!
Now, let’s address the elephant in the room: the crown is currently not winning any popularity contests against the euro, as it hovers around 25 crowns and 40 pennies per euro. Supportive or not, this is the equivalent of showing up to a party only to find your ex is now dating your best friend—awkward, right? Since September, our dear crown has taken quite the hit, losing about 40 pennies against the euro and nearly a whole crown against the American dollar. Just when you thought it couldn’t get worse, it did! Today’s exchange rate puts the dollar at a wickedly high 23 crowns and 50 pennies.
Please hold your applause! Before we dive deeper, let’s bring Jan Berka, our analyst extraordinaire from Roklen, into the spotlight. He states that the precarious dance of currencies is closely tied to the pre-election excitement surrounding none other than Mr. “You’re Fired” himself, Donald Trump. Yes folks, the markets are buzzing like bees around honey, banking on Trump’s potential victory—talk about a gamble!
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According to Berka, look out for that rising dollar and those sturdy US government bonds, especially the long ones! It’s like watching a toddler at a buffet, going for the biggest slice of cake! If this mood persists, our beloved crown could be in for a rocky ride, weakening against the euro as it nears 26 crowns. Just imagine that: buying euros like they’re on clearance sale at your favorite store!
Now, it’s not all doom and gloom. For those cheering for Kamala Harris, an outright victory from the Democrats could set the Czech crown on a more stable path—this could mean a comforting retreat to the 23 crowns per dollar. Just think, a soothing balm on our financial wounds!
And yet, as the plot thickens, so too does the uncertainty in the markets. After the election dust settles, Berka predicts we’ll see a stabilization—not through magic fairy dust, but rather good old-fashioned economic metrics. If you’re thinking of a short vacation to the land of the dollar, you might want to invest now! Creditas economist Petr Dufek suggests stocking up on dollars as a safety net, though he’s not waving the alarm bells just yet, referring to election rhetoric as “great for sound bites, but what happens when the confetti settles?”
So grab your winter gloves, folks! Prepare to exchange some euros for your ski vacation, and be ready for a potentially slippery slope towards 25.60 crowns per euro if Trump clinches that coveted victory. But wait! If you hear ‘Kamala Harris for President,’ don’t get too cozy—there might be a surge of strength returning to our dear crown.
A Final Act of Uncertainty: What Does the Crowd Want?
And there we have it, my friends, a whirlwind of speculation framed by the impending electoral circus! Economists like UniCredit’s Pavel Sobíšek suggest that even in a close or contested result, frequent festival-goers (read: speculators) might face a rocky road ahead. One can hardly blame them for queuing up for the rides while clutching their currencies tightly, right?
Ultimately, as the election approaches, expect a melting pot of reactions: victorious cheers or inconsolable sobs—much like watching your favorite TV show finale, but with actual money on the table. Just remember, be cautious, stay informed, and don’t forget to wear a good hat. You might need it for the rides ahead!
And there you have it, a delightful romp through the realm of economics peppered with a touch of humor and sass! Enjoy the ride, and may your crowns shine bright!
On Tuesday, the Czech koruna traded at approximately 25 crowns and 40 pennies per euro, marking a notable fluctuation in its value. Since the beginning of September, the koruna has experienced a decline against the euro, weakening by around 40 pennies. Notably, its depreciation against the American dollar has been even more pronounced, losing nearly one full crown during the same timeframe. Presently, the exchange rate reflects that one dollar is valued at 23 crowns and 50 pennies.
According to analysts from Roklen, led by Jan Berka, the shifts in currency rates are intricately linked to market sentiments surrounding the upcoming American elections. Despite the tight race, there is an underlying market optimism favoring the Republican candidate, Donald Trump, whose lead in pre-election polls remains razor-thin.
Shares of Trump’s media firm rise as investors bet on his victory
Berka elaborated to Novinkám, stating, “We have witnessed a strengthening of the dollar alongside rising yields from U.S. government bonds, particularly those with longer maturities.” He pointed out that should the current trend of market speculation favoring Trump persist, it could negatively impact risk-sensitive currencies like the Czech koruna.
The outcome of the presidential election will significantly influence future dynamics. Should Trump secure his victory, compounded by a Republican majority in Congress, further strengthening of the dollar alongside rising U.S. bond yields is a strong possibility. Berka warned, “An outright victory for Donald Trump could lead to the koruna weakening towards 26 crowns per euro and surpassing 24 crowns per dollar.”
In a contrasting scenario, should Kamala Harris emerge victorious, it could provide temporary relief for risk currencies, likely causing a short-term decline in the dollar’s strength. Speculative actions could lead to a surge in the koruna’s value to about 23 crowns per dollar, potentially stabilizing around 25 crowns per euro, the economist predicted.
In the months following the elections, analysts foresee a market stabilization, leaning towards a strengthening dollar, particularly as the U.S. economy shows resilience compared to the struggling eurozone. Creditas economist Petr Dufek remarked, “It’s prudent to purchase some dollars for travel now; however, I do not anticipate a drastic decline of the koruna following a Trump victory.” He emphasized that “the rhetoric pre-election and the practical measures after the election differ vastly. Markets might display short-term exuberance but will ultimately be grounded by economic realities and Federal Reserve policies.”
In addition to acquiring dollars for trips to the United States or other exotic locales, exchanging a portion of euros for an upcoming European ski vacation could also be wise.
Česká spořitelna economist Jiří Polanský projected, “If Donald Trump claims victory, we could see the koruna slipping slightly to around CZK 25.60 per euro.” Conversely, he noted that if Kamala Harris wins, a strengthening of the crown towards close to 25 crowns per euro could occur.
Differing from his counterparts, UniCredit Bank economist Pavel Sobíšek believes that, regardless of the outcome, the koruna might experience a slight strengthening immediately after the American elections due to reduced market anxiety. However, he concurred with the general sentiment that a tightly contested result or a tie would be detrimental to the koruna.
In view of Trump’s victory, Europe has an economic nightmare
Economic
