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Czech central bank vice-governor: crown may go both ways after cap lift

EconomyJan 14, 2017 03:40AM ET
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© Reuters. Czech central bank vice-governor: crown may go both ways after cap lift

PRAGUE (Reuters) - The Czech crown will not necessarily strengthen after the central bank lifts its cap on the currency, and may well move in both directions, central bank Vice-Governor Mojmir Hampl said in an interview published on Saturday.

The Czech central bank launched the intervention regime in 2013 and has since prevented the crown from strengthening beyond 27 to the euro.

"If I were a market player, I would definitely not bet all my money that the only direction for the crown, after the exit from the exchange commitment, would be to strengthen," Hampl told Lidove Noviny.

The bank has been facing increasing pressure to defend its crown cap - it bought around 9 billion euros of foreign currency in the first 10 days of January to hold the crown back as investors poured in expecting the bank to srap the commitment.

Hampl said the bank's position remained that it would not stop the interventions before the second quarter and the board saw the most likely date as mid-2017.

An overwhelming majority of analysts polled by Reuters on Friday expected the Czech central bank to end its crown cap as soon as the second quarter, swayed by an acceleration in the inflation rate and an influx of investor funds.

Czech inflation reached the central bank's 2-percent target in December for the first time in four years, but Hampl said the board was more interested in the broader trend than in one set of data.

"It is not about one moment, but also the right assessment of future development," he said.

"For example, that we will be quite sure that we won't have to return to the exchange commitment in one year and a half or two years."

Czech central bank vice-governor: crown may go both ways after cap lift
 

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