The Czech koruna gained today even as the central bank signaled that it may intervene to weaken the currency and spur inflation. The central bank left interest rates near zero at yesterday’s meeting.
The Czech National Bank kept its main interest rate at the technical zero (0.05 percent) yesterday. With near-zero borrowing costs, the bank has no room for rate cuts and may resort to intervention to prevent further inflation deceleration, weakening the currency at the same time. Indeed the CNB said:
The likelihood of launching foreign exchange interventions to ease monetary policy has increased further.
The koruna managed to gain after falling against most major currencies yesterday.
USD/CZK fell from 19.6860 to 19.6775 as of 23:24 GMT today.
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