In a remarkable display of stability amid global financial turbulence, the Czech crown is demonstrating unexpected strength, particularly against the US dollar. The currency maintains its ground despite market volatility triggered by President Trump’s aggressive trade policies.
The crown has achieved notable gains against the dollar, dropping from above 24 CZK/USD in early March to an impressive 21.87 CZK/USD, with morning rates even reaching 21.70 CZK/USD – levels not seen since July 2023. Against the euro, the crown maintains a steady position near 25 CZK/EUR, actually strengthening by almost thirty hellers compared to early April.
Market analysts attribute this performance to unusual patterns in asset behavior. Citfin analyst Miroslav Novák points out that traditional market dynamics, where risk aversion typically strengthens the dollar, have been upended. XTB’s chief economist Pavel Peterka suggests that the crown’s strength is partially due to favorable inflation outlook in the Czech Republic, supported by declining energy and fuel prices.
The situation has been further complicated by Trump’s criticism of Federal Reserve Chairman Jerome Powell, whom he mockingly calls “Mr. Too Late” for not following the European Central Bank’s lead in reducing interest rates. This political tension has contributed to the dollar’s vulnerability, with the dollar index falling below 98.5 and losing almost 10 percent since the year’s beginning.
However, the real victor in this financial landscape is the euro, which has significantly strengthened against the dollar to 1.15 USD/EUR, a dramatic improvement from near-parity at the year’s start. This surge is driven by capital flight from the US to Europe and expectations of fiscal expansion in the EU.