Prague Today, the koruna is weakening against both world currencies. It returned to the euro above 27 crowns per euro, where it was last at the end of May. It is currently trading at CZK 27.05 / EUR, which is 31 pennies weaker than on Friday, it has weakened by a koruna in the last month.
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The koruna strengthened at a record high. It is best against the euro since March, and even against the dollar since September 2018 |
It lost almost 50 years against the dollar compared to Friday’s close and is trading at 23.03 CZK / USD, where it was two months ago. This follows from the data on the Patria Online website.
According to Akcenta analyst Miroslav Novák, the koruna is not evidenced by deepening nervousness in the financial markets and accelerating covid numbers in the Czech Republic and other European countries.
“The current weakening of the koruna is not only due to the sharp increase in active cases of covid-19 infected in the Czech Republic, but most of all to the fear that very strong restrictive measures will be introduced in many European countries to slow down the pandemic,” he said. According to him, complete “lockdowns” are not unrealistic at all, as was the case in the spring. Apart from the Czech Republic, the situation is alarming in France and Spain.
“It is already clear that the economic recovery in Q3 will stop at the end of this year, and unfortunately the quarter-on-quarter decline in GDP in Q4 cannot be ruled out at all – this applies to both the Czechia and the eurozone,” said Novák. According to him, a significant weakening of the koruna above CZK / EUR 27 is likely in the coming days and weeks.
The koruna was strongest against the euro this year in February, when it reached a record of more than seven years. It was helped by developments on world markets, but also by a surprising increase in rates by the Czech National Bank in early February. In mid-February, it traded at CZK 24.82 / EUR. Then it started to weaken and on March 1, when the first three cases of coronavirus were confirmed in the Czech Republic, it was trading at CZK 25.48 / EUR. In the following days, it gradually weakened by more than two crowns, and on March 18, the daily minimum was significantly close to the level of 28 crowns per euro, where the koruna was last in January 2015.
In recent weeks, the crown has weakened, influenced almost exclusively by the development of the coronavirus epidemic. Raiffeisenbank analyst Vít Hradil stated that at the end of August the koruna did not deviate from other risky assets, but from about September 8 it “tore off” and continued to weaken alone. Around that time, according to him, it was becoming clear that the epidemic situation in the Czech Republic was extremely serious by European standards.
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