Is a Czech currency the worst?

Posted by bara 19/01/2015 at 13h18

Czech crown is according to the journal The Wall Street Journal the most debilitating currency of the world. This designation is wrong because the article evaluates the development of currencies during the early days of 2015, and it has no explanatory value. Weakening of the currency is commonly used as an instrument of export promotion. The Czech Republic used it in 2013, when the Czech National Bank sharply depreciated exchange rate on 27 CZK / EUR.

exchange Rates with coins

However, the Czech currency fell to a level of 28 crowns per euro in recent days. The crown was so weak in February 2009. The rate for the dollar is the weakest in the last 9 years - it has exceeded the limit of 24 crowns per dollar. Weakening is a response to low inflation last year. Another central bank intervention is the reason for today's weakening of exchange rate. The Czech National Bank will meet in February and it may announce an increase in the level of intervention from the current 27 CZK / EUR at the level of 29 CZK / EUR. President MiloŇ° Zeman expressed his disagreement with the CNB interventions in monetary policy in the form of intervention in foreign exchange rates. Why should CNB again intervene? Cheap oil is the reason because it reduces inflation and the inflation target of 2% is not fulfilled.

Weakening crown helps exporters. On the other hand, imported goods and foreign holidays are more expensive. The weakening of the CZK to USD prevents even greater decline in prices of petrol and diesel. Gasoline and diesel still further cheapen and some sources predict price 25CZK / 1 litre. Governor of CNB said that exchange rate movements are normal and CNB has no reason to react. The actual decision of the Czech National Bank is yet uncertain.

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