The Czech currency is the strongest against the euro in more than a decade. On the 8th of January, it strengthened by seven cents to CZK 24.44 to the EUR.
Against the dollar, it improved by 16 cents to CZK 21.54 to the USD. This is according to data on the Patria Online server.
According to analysts, the expected further increase in interest rates by the Czech National Bank continues to help the koruna strengthen.
The Czech currency has been at its strongest since mid-2011 when it traded at CZK 24.35/EUR at one point, said Martin Gürtler, an economist at Komerční banka.
Earlier in the week, the koruna hit its most substantial level against the euro since mid-October 2012, and the exchange rate then improved further. Since the beginning of the year, it has gained 1.8 percent against the euro and 1.5 percent against the dollar.
According to Gürtler, investors have not yet managed to fully absorb the latest information from the CNB since just before Christmas, when central bankers raised the base interest rate by one percentage point to 3.75 percent.
But the koruna will weaken in the coming year, according to the outlook compiled by Reuters based on analysts’ forecasts.
Gürtler also thinks so, as the attractiveness of the Czech currency for investors will decrease after the Fed is expected to raise interest rates. “By the end of the year, we expect the koruna to be close to CZK 25 to the euro, ” he added.
Delivered by Czechtrade team Canada