Czech Koruna Soars As Central Bank Ends Currency Peg
- Czech National Bank announces end of currency peg, in place since November 2013.
- The bank was not committed to maintain the peg beyond April 1 – so move was expected at some stage.
- EURCZK plummets – bank Governor will speak at 1215 GMT.
The Czech Koruna is at its highest level against the Euro since November 2013 and could be poised to climb even further after the Czech central bank ended its currency cap. Investors have bet an estimated $65 billion that the crown will strengthen after the end of the currency cap, which had been in place since November 2013.
The central bank had been keeping the crown on the weak side of 27 per euro. But in an extraordinary meeting held Thursday morning, the CNB announced it was removing the cap in order to help revive inflation, reiterating it would be ready to step into the market if it needed to smooth currency swings.
“The CNB stands ready to use its instruments to mitigate potential excessive exchange rate fluctuations if needed,” the bank said in the statement. The bank said Governor Jiri Rusnok will hold a news conference to discuss the decision at 2.15 pm (1215 GMT) in Prague.
The decision sent the crown into wild swings, but it has eventually settled at its highest since November 2013.
EURCZK 15-Minute Chart (Intraday April 6, 2017)
--- Written by Oliver Morrison, Analyst
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