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Report: Czech central bank could continue with FX interventions into H2

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Report: Czech central bank could continue with FX interventions into H2

The vice governor of the Czech National Bank, Mojmir Hampl, said the regulator could postpone the end of its interventions to weaken the Czech koruna until the second half of 2017, Bloomberg News reported Jan. 19.

Reiterating the regulator's "hard commitment" to continue the intervention policy at least until the end of March, Hampl said current economic statistics support the original mid-2017 deadline for lifting the koruna cap. Hampl added, however, that he would not rule out the possibility that the targeted date "will stop being considered as the most likely moment for the exit, and that this most likely moment could move to the second half of the year."

Inflation in the Czech Republic has been growing faster than expected, reaching a 2% target in December 2016, but consumer prices in the eurozone have also been increasing, providing an argument against the quicker removal of the cap, which is set at around 27 Czech koruna to the euro, Hampl told Bloomberg.

He added that a quick appreciation of the koruna after the end of interventions was not certain and said the regulator will strive to prevent excessive volatility of the national currency.

"I wouldn't be surprised even by some currency depreciation. I'd expect a more volatile, bumpy road to a new equilibrium," Hampl said.