Business News

Photo: Štěpánka Budková
0:00
/
0:00

In Business News: the Czech National Bank has moved to weaken the crown, interest rates have been left unchanged at an all-time low, the PPF investment group has signed a deal to buy a majority stake in Telefonica Czech Republic and the clothing retail chain C&A is curbing its expansion plans after seeing a drop in profits.

National Bank launches monetary intervention to weaken the crown

Photo: archive of Radio Prague
The Czech National Bank on Thursday launched unlimited currency sales to weaken the crown, in its first monetary intervention since 2002. The bank said its aim was to stabilize the exchange rate at 27 crowns against the euro, with forex market interventions to continue for as long as necessary. Within hours of the announcement, the crown dropped to its weakest level since 2009, selling at 26.6 crowns against the euro and 20.1 crowns against the dollar. Interest rates were left unchanged at an all-time low of 0.05 percent. Analysts expect the central bank to leave the rates on hold at least until the end of next year.

Weaker crown to increase price of imports, help exporters

Photo: Hafiz343, CC BY-SA 3.0
The monetary intervention, which was partly prompted by surprisingly low inflation rates, is expected to increase the price of imported goods, among others food products and fuel, as well as the price of services. On the other hand a weaker currency will have a positive impact for Czech exporters and is expected to help create new jobs. It will however be less advantageous for producers who import materials for production. The Association of Exporters has welcomed the decision predicting a 2 to 3 percent growth in exports within six months.

Some analysts critical of monetary intervention

Photo: Štěpánka Budková
Meanwhile, some analysts have criticized the move as risky and unnecessary given the country’s trade balance results. Raiffeisenbank chief analyst Michal Brožka points out that the decision will have a negative impact on consumers even before they have had time to recover property from the crisis and would undermine efforts to encourage spending. The former Czech president and finance minister Vaclav Klaus also criticized the monetary intervention as a wrong and risky move saying deflation was a far lesser threat for the economy than stifling economic growth which has been absent for close to five years.

PPF takes over telecommunications firm Telefonica Czech Republic

Photo: Tomáš Adamec
The PPF investment group, owned by the Czech business magnate Petr Kellner, has signed a deal to buy a majority stake in Telefonica Czech Republic, the country’s biggest telecommunications company. PPF is paying 64 billion crowns for a 66 percent stake in the company and is expected to place a mandatory offer for the remaining shares. Telefonica Czech Republic and Telefonica Slovakia, which is part of the operation, will change their company names but will continue to trade under the O2 brand for a maximum of four years. The company will also join Telefonica's Partners Programme, an initiative offering other operators the opportunity to benefit from Telefonica's scale and cooperate in key business areas.

Unipetrol to buy Shell's stake in Czech refinery

Photo: Tomáš Adamec
The Czech downstream oil group Unipetrol has agreed to buy partner Royal Dutch Shell's 16.3 per cent stake in Česká Rafinerská for 27.2 million US dollars, boosting its stake in the country's only refinery to 67.6 per cent. The deal's completion is expected at the beginning of 2014 and will give Unipetrol a stronger say in the operation. Italy's Eni will be the only other shareholder.

C&A's profit in ČR drops by 59%

Photo: Kristýna Maková
The clothing retail chain C&A saw its profit in the Czech Republic fall by 59 percent to 70.2 million crowns in the financial year 2012/2013, and its revenues decreased by 6 percent, according to the company's annual report. One of the reasons for the decrease was the closure of several outlets which combined with the growing costs of material, services and write-offs. Due to the situation on the market, the company has decided to temporarily restrict expansion.