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The state of emergency and its impact on the Czech economy and the koruna’s exchange rate

The state of emergency in the Czech Republic has been in force again since Monday, October 5, accompanied by a set of new restrictive measures.

It is therefore necessary to prepare for the restriction of mass events, the functioning of secondary schools and restaurant facilities for at least fourteen days.

So far, the measures are significantly milder than during the spring, with the continuing increase innew records were set over the weekend) is worrying. Official measures may thus increase in time over time.

The crown will remain weak

That is why in the coming weeks we do not believe much that the Czech crown can get back on its feet.

The mood in the Czech Basin will undoubtedly reflect the mood in global markets, which are likely to remain in the grip of double uncertainty – from the second wave of the pandemic and from the US presidential election.


GRAPH: Development of the koruna’s exchange rate against the euro
In the last six months

Source: tradingeconomics.com


Trump’s impact

Trump’s coronavirus disease is a new element that has so far visibly reduced its re-election. According to the latest opinion polls, he loses fourteen points to presidential opponent Joe Biden.

His illness may prevent him from campaigning for a month before the election and participating in scheduled election debates.

If Biden wins the presidential election, this may be slightly positive news for risky assets, including Central European currencies.

Biden, who heads the White House, would probably push for an even stronger budget stimulus (up to $ 3 trillion), especially if he had a one-color Democratic Congress behind him.

Plans for higher taxation of corporations and wealthy Americans may take the wind out of stock, especially for the rest of the world, but plans to massively stimulate US consumption are likely to be more important – the US shopping cart remains the largest in the world.

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