Czech Republic: Czech koruna strengthens in February
February 29, 2012
On 29 February, the Czech koruna (CZK) traded at 24.8 per EUR, which was 1.4% stronger than the CZK 25.2 per EUR recorded in the previous month. The figure followed a 2.4% appreciation in January. Nonetheless, at the current level, the koruna is still trading 2.0% weaker than the same month last year. The gains observed in January and February have pulled the Czech koruna ahead, and is now trading back at the levels observed in September 2011. The CZK, together with other emerging market currencies, strengthened in late February, due to the European Central Bank's decision to launch a second long-term refinancing operation (LTRO). The ECB helped the banks in the Eurozone providing EUR 530 billion in long-term loans in order to avert a credit crunch. Part of these additional resources is likely to reach FX markets in Eastern Europe. The Czech National Bank expects the koruna to average 24.9 per EUR this year, before strengthening further to an average CZK 24.3 EUR in 2013.
Author: Ricardo Aceves, Senior Economist