The Czech koruna fell today after the Czech central bank left interest rates unchanged yesterday and analysts speculated that it may weaken the currency to support the declining nation’s economy.
The Czech National Bank kept its main interest rate at 0.05 percent yesterday. Economists speculated that the bank may weaken the koruna, even though Governor Miroslav Singer noted that the exchange rate is already weak:
The koruna exchange rate, which is weaker than assumed in the forecast, for now is partly offsetting domestic anti- inflationary developments. Although the exchange rate is helping us to some extent at the moment, we still perceive the risks as slightly anti-inflationary.
The Czech economy is in recession and indeed needs some help. Gross domestic product shrank 0.3 percent in the third quarter of 2012 following the 0.4 percent decline in the previous quarter. Inflation slowed from 3.4 in October to 2.7 in November.
USD/CZK rose from 19.0325 to 19.0410 and EUR/CZK went up from 25.1720 to 25.1780 as of 3:27 GMT today.
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