Czech National Bank Keeps Koruna Cap Intact

The Czech koruna rose against the euro today after falling yesterday as the nation’s central bank kept interest rates near zero and left the cap on the currency intact during its policy meeting. The koruna rose together with other most-traded currencies against the dollar.

The Czech National Bank decided to keep its main interest rate at the technical zero (0.05 percent) yesterday. The central bank remains concerned that inflation slows even as economic recovery proceeds. With no more room for cutting interest rates, the CNB has to resort to unconventional methods to spur inflation growth. As a result, the bank implemented policy to keep the currency below the 27 per euro limit, the measure that is not unlike the one introduced by the Swiss National Bank.

The CNB reminded that it wants to prevent the koruna from appreciation but has nothing against decline of the currency. The koruna weakened against the euro as a result of such stance but managed to bounce today. At the same time, the worse-than expected employment data from the United States made other currencies gain on the dollar, and the Czech currency was not an exception.

USD/CZK fell from 20.6664 to 20.6105 as pf 19:23 GMT today. EUR/CZK declined from 27.6820 to 27.6630.

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