When will the era of weak Czech crown be over?
25.09.2015Company: Amcham
In 2015, Czech economy will grow more than two times faster than the eurozone while inflation is similar at both places. Due to the slow growth of wages also rapid growth in the Czech Republic does not push up imports and does not impair the balance with the rest of the world. It is exactly the opposite - the rapid growth goes hand in hand with record trade surpluses and current account (450 bn. and 120 billion. CZK). So if it was not for the central bank, the Czech currency would considerably strengthen.
Until the wages and prices begins to significantly accelerate, it will be truth that the longer is the Czech crown in the intervention scheme, the more should the balanced exchange rate strengthen. We estimate the balanced exchange rate will move slightly below 25.00 EUR / CZK in the second half of next year (the earliest date for exit).
More information in the attached files in Czech language- Jan Bureš, Chief Economits of Poštovní spořitelna comments on the weak Czech crown and presenatation on ending the era of weak Czech crown.
