Money, euro, Czech koruna, banknotes, coins – illustration photo.
Prague – The current strengthening of the Czech crown is rather a temporary phenomenon, in the longer term its exchange rate is at a weaker level, Miroslav Diro, spokesman for the Czech Chamber of Commerce, told ČTK today. According to him, in the national economic forecast, the chamber calculates values closer to 25 crowns per euro. On Thursday, the koruna closed trading at a rate of 23.69 CZK/EUR, making it the strongest against the euro in the last 14.5 years. It's a few pennies weaker today.
The Czech currency has been steadily strengthening against the euro since around mid-November last year. Already at the end of last year, the euro reached its strongest exchange rate in the last 11 years.
“If we look back objectively at the past, some phenomena on the foreign exchange market are very remarkable and difficult to explain. For more than three decades, the koruna has not lost against the euro (the original German mark) and the dollar, despite the overall much higher growth of domestic prices in compared to prices in Germany or the USA,” said Diro.
According to him, a longer-term trend of strengthening the koruna would mean a reduction in the competitiveness of Czech exports in the conditions of a relatively small, open Czech economy. Domestic industry is in many ways dependent on imported inputs, a stronger koruna will reduce their price. However, this reduction in crown prices in the order of lower units of percent is marginal compared to the inflationary growth of euro prices themselves in tens and hundreds of percent.
“However, on the other hand, even a few percent increase in the price of exports can put our exporters out of the competition in a very competitive world market,” pointed out Diro. strengthening does not help much, agreed Bohuslav Čížek, director of the economic policy section of the Union of Industry and Transport of the Czech Republic. According to him, it is becoming more and more difficult for companies to project high costs into prices, and for the Czech Republic as an export economy, the stronger koruna complicates the position even more. , what will be their final balance in closed deals. That's why companies often hedge against exchange rate fluctuations, which represents additional costs. Our survey, which we conduct every quarter together with the Czech National Bank, shows that the share of export financial guarantees has fluctuated in recent years between 40 and 50 percent,” added Čížek.