The Czech crown fell to its lowest level since the start of the war in Ukraine

As a result of the weakening of the national currency, it was recently reported by the deputy head of the Czech National Bank, Jan Freit, who said in an interview with Bloomberg that a rate reduction of half a percent was possible at the meeting of the central bank on Thursday. due to low inflation in June. This accentuated the damage as price markets were in decline by less than a quarter of a percentage point.

Signs of a gradual economic recovery, the improvement of the current account balance of payments and the expected relaxation of foreign monetary policy mean that the krona may be slightly weaker than fundamental indicators suggest, according to a member of the bank’s board of directors.

“This is another argument for not being afraid to cut rates when we know that the exchange rate can strengthen over time,” he said.

The Czech crown was not helped by a statement from the bank’s board member Tomas Holub that he believes it is reasonable to reduce interest rates from the current 4.75 to 4% before the end of the year.

Weak data on domestic economic growth for the second quarter of 2024, published on Tuesday, also contributed to the weakening of the crown, according to analyst Jaromir Getse from Komerční banka.

As a result, the Bank’s Board cut interest rates as expected, that is, by 25 basis points. The Czech currency responded by strengthening to 25.35 crowns per euro.