Government calm over record-breaking Czech crown
In the course of the last 12 months the Czech crown has strengthened by a staggering 22 percent, becoming the fastest appreciating currency in the world. While exporters warn that the super-strong crown will inevitably slow down economic growth, the government sees no threat in the current exchange rate.
“It’s a serious problem but we expect that the Czech crown will depreciate, that it will correct its strong appreciation trend. Should this happen, we do not expect any strong negative effects on the Czech economy. If the current trend should continue, however, we would indeed expect strong negative effects on the Czech GDP growth.”
“Any strategy towards weakening the Czech koruna, could involve a direct intervention. But what we are waiting for is a change in the global sentiment which should eventually weaken the crown. If the Czech central bank chooses the right time, then it could intervene. But before that I would expect some stronger words, a more articulate plan against the appreciation of the Czech crown.”
“My opinion totally contradicts that of our prime minister. I believe that in the medium-term, we will all feel the negative effects, not just producers or exporters but consumers as a whole. The competitiveness of our industry will decrease; the potential of our economy will drop significantly. In the medium-term, this will lead to many factories closing down and unemployment will rise.”
Despite a growing discrepancy of views of the government on the one hand and Czech industrialists on the other, there is one point on which they all agree: once the crown starts devaluating, its decline will not be as steep as the current appreciating frenzy.