The Czech crown has been steadily losing strength against the euro throughout the year. As of today around 17:00, it was trading at CZK 24.13/EUR, which is ten cents weaker compared to the previous close. This marks the weakest performance of the koruna against the euro since January 2 of this year. Similarly, against the US dollar, the koruna depreciated by 16 cents to CZK 21.78/USD from Friday evening’s rates, according to data from Patria Online.
The recent depreciation of the Czech currency can be attributed to a statement made by Czech National Bank (CNB) Deputy Governor, Eva Zamrazilová, last week. Economists, including Jan Vejmělek of Komerční banka, believe that her comments about expecting further weakening of the Czech currency throughout the year, possibly by up to one koruna in the annual horizon, had an impact on its decline. Additionally, the Czech crown’s unfavorable response to news from German industry has also contributed to its weakening fundamentals.
Analyst Jaroslav Tupý from Purple Trading points out that the Czech crown’s depreciation is in response to the anticipated changes in market rates in both the US and the eurozone. This week, the US Federal Reserve and the European Central Bank are expected to raise their base interest rates by 25 basis points each.
Conversely, Czech crown traders are confident that the Czech National Bank will eventually begin reducing interest rates later this year. Such a move would narrow the interest rate differential between the Czech crown and the euro or dollar, potentially making the Czech currency less attractive to investors.
