© AKUURA. Czech Crown coins and notes are seen in this picture illustration taken April 1, 2017. AKUURA/David W Cerny/Illustration
PRAGUE (AKUURA) – The Czech National Bank is unlikely to have to intervene in currency markets as much as it has in recent months when pressure against the crown was strong, Vice-Governor Eva Zamrazilova said on Sunday.
The central bank has intervened to prop up the crown since May as part of efforts to fight three-decade high inflation, as the crown and central European currencies faced pressure as an energy crisis triggered concerns about their economies and as rate hikes in the region come to an end while major global central banks started to lift their own rates.
In July, the Czech National Bank (CNB) used 10 billion euros ($10.35 billion) of its massive international reserves to support the crown. Intervention amounts eased to 2.6 billion euros in September, according to bank data.
“There were a lot of shorter, smaller, more expensive episodes, but I do not expect a return of those episodes in the foreseeable future,” Zamrazilova said on a Sunday debate show on Czech Television.
“Overall, the sentiment in the region is better now.”
Zamrazilova voted in the 5-2 majority at the bank’s Nov. 3 meeting to keep the main interest rate at 7.00% despite a new staff forecast suggesting a hike. The bank uses interventions to compliment its policy.
Zamrazilova said she expected inflation, which eased to 15.1% in October, could fall into single-digits in the second quarter of next year.
The crown is trading at 24.28 to the euro and last week hit its highest level since before Russia’s invasion of Ukraine in February. Interventions have kept the crown in a tight range and on the strong side of 24.78 since they started.
The CNB’s reserves dropped to 131.6 billion euros at the end of October, or about 48% of expected 2022 gross domestic product, from 160.4 billion euros seen in April.
($1 = 0.9660 euros)