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14 Jan 2015
CNB calms down anticipations of CZK devaluation – KBC
FXStreet (Barcelona) - According to KBC Bank, the comments by CNB’s Governor supports their view that the CNB might refrain from altering its intervention policy in its February meeting.
Key Quotes
“Yesterday, the governor of the Czech National Bank, Miroslav Singer, addressed the recent slump of the koruna triggered by speculations that after more than a year the CNB may intervene again against the currency in order to meet its inflation target.”
“In his blog, Mr. Singer argues that it is not necessary to respond hastily to deflationary impulses due to falling food and oil prices.”
“According to the governor, substantial part of the impulses has already been absorbed in today´s prices and will affect inflation throughout this year and at the beginning of 2016. Singer also recalled the CNB Board´s commitment to consider another exchange rate shift only in case of a sustained increase in imported deflationary pressures. In the end, such pressures would lead to a slump in domestic demand, renewed risk of deflation in the Czech economy, as well as a systematic decline in inflation expectations.”
“Singer´s statement thus supports our view that the CNB Board is not planning to alter the intervention policy in its next meeting on February 5. The Czech koruna responded immediately by strengthening to 28.10 EUR/CZK from 28.45 EUR/CZK.”
Key Quotes
“Yesterday, the governor of the Czech National Bank, Miroslav Singer, addressed the recent slump of the koruna triggered by speculations that after more than a year the CNB may intervene again against the currency in order to meet its inflation target.”
“In his blog, Mr. Singer argues that it is not necessary to respond hastily to deflationary impulses due to falling food and oil prices.”
“According to the governor, substantial part of the impulses has already been absorbed in today´s prices and will affect inflation throughout this year and at the beginning of 2016. Singer also recalled the CNB Board´s commitment to consider another exchange rate shift only in case of a sustained increase in imported deflationary pressures. In the end, such pressures would lead to a slump in domestic demand, renewed risk of deflation in the Czech economy, as well as a systematic decline in inflation expectations.”
“Singer´s statement thus supports our view that the CNB Board is not planning to alter the intervention policy in its next meeting on February 5. The Czech koruna responded immediately by strengthening to 28.10 EUR/CZK from 28.45 EUR/CZK.”