The koruna continues to strengthen, and the euro is already below 23.50

The koruna broke another threshold on Tuesday afternoon, breaking below CZK 23.50 per euro for the first time since July 2008. In the afternoon, it briefly reached CZK 23.47/EUR, continuing its appreciation this year, as Trinity Bank’s chief economist Lukáš Kovanda pointed out. Shortly before the end of trading, the koruna weakened slightly and closed at CZK 23.52/EUR.

The Czech currency has been doing well for several months. About a month ago, it broke the CZK 23.80 per euro level, and now it has even broken the CZK 23.50 per euro. At around 14:30 on Tuesday, the exchange rate stood at CZK 23.49/EUR, Patria data showed.

“The crown is on the move today. After breaking the 23.60 per euro level, it is now also breaking the 23.50 per euro level for the first time since August 1, 2008. In the entire trading history of the koruna-euro pair, since 1999, it has broken the 23.50 level only on 14 days, mostly in the summer of 2008,” Kovanda said on his Twitter account.

The koruna reached an all-time high in mid-July 2008 when the exchange rate against the single European currency was below CZK 23. At that time, the Czech National Bank (ČNB) verbally intervened in the market to weaken the exchange rate.

According to Jakub Seidler, chief economist at the Czech Banking Association, several factors continue to influence the strong koruna. He listed them at the end of January:

“The current appreciation of the koruna is due to a combination of factors, from more positive global sentiment to the interest rate differential, past ČNB interventions, or a certain option of the CNB to re-enter the market in the event of a more significant weakening of the koruna. This makes the koruna more attractive to foreign investors, and the koruna continues to strengthen despite less positive fundamentals and a significant balance of payments deficit,” Seidler commented.