Analysts: strong crown could be blessing in disguise for Czech exporters
While Europe was going euro-crazy this week, economic analysts in the Czech Republic stood back and watched as the crown rose to ever greater heights against the single European currency. The crown is currently trading at 32.4 to the euro, and could stay there for some time. Analysts say the crown's strength is mainly the result of the knock-on effect of high levels of foreign direct investment in recent years. But a strong crown is of course a mixed blessing for the Czech economy - on one hand it encourages a rise in labour productivity, brings prices in the Czech Republic closer to those in the EU, and makes foreign holidays cheaper. It's also good for ensuring price stability and keeping those interest rates down. On the other a strong crown is a thorn in the side of Czech exporters, as it makes Czech goods more expensive and therefore less competitive abroad. Prime Minister Milos Zeman has brushed aside those concerns - he recently compared the strong crown to a Sword of Damocles, something which should encourage exporters to raise productivity and introduce more innovation. He's not alone - Czech officials say a strong crown will actually help exporters prepare for keener competition once the Czech Republic joins the EU. But do the analysts agree? For an answer to that question we called Jan Slaby from the leading equity firm Wood and Company: Jan Slaby from the equity firm Wood and Company, on the rise and rise of the Czech crown.
