Exchange Holiday Money Now: Czech Koruna To Weaken, Analysts Agree

According to financial analysts, people planning to exchange a hefty sum for their summer vacation should do so now. During the year’s first half, the Czech koruna is expected to weaken, likely reaching the threshold of 25 korunas per euro. A potential increase is anticipated only in the second half of the year. As of now, the exchange rate is 24.68 korunas per euro.

Miroslav Novák from Akcenta CZ expressed his perspective, stating, “If I start from the assumption that the koruna tends to weaken or at least not strengthen during periods of domestic economic stagnation or decline, then the trading of the koruna at weaker values is outlined for the first half of this year.” Novák anticipates a natural weakening of the koruna to above 25 CZK/EUR, especially if the domestic economy remains subdued for longer.

Dominik Rusinko, an analyst at ČSOB, shared similar sentiments. He predicted, “I assume that selling pressures will prevail on the koruna market in the first half of this year.” The primary source of these pressures will be the narrowing interest rate differential (percentage spread between interest rates of two currencies) between the koruna and the euro and the dollar.

However, the year’s second half might bring a reversal for the Czech currency. Both Novák and Rusinko expect a return to the 24.50 koruna level, assuming an improvement in the condition of the Czech economy and the external environment.

This year, several factors will influence the koruna’s exchange rate. These include the lowering of rates by the Czech National Bank and the expected restart of domestic industry and exports. Whether the government decides to have the koruna in the ERM II exchange rate mechanism next year, which is a preparation for adopting the euro and involves fixing currencies to the euro within a fluctuation band, could also significantly impact the koruna.