Money, coins, Czech money – illustration photo.
Prague – In the year since the start of the Russian invasion of Ukraine, the Czech koruna has weakened against the ruble by almost 12 percent to 29.90 CZK per 100 rubles. In contrast to the Ukrainian hryvnia, the Czech currency strengthened by 19 percent to 0.6 crowns per hryvnia. XTB brokerage company analyst Štěpán Hájek told ČTK today. The US dollar strengthened in the world.
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According to Hajek, the relative strength of the ruble can change very quickly, already this year, when the anti-Russian sanctions should begin to take full effect. Russia will miss a significant part of the European market for gas exports, and the introduction of an embargo on Russian oil will also be felt. Gradually, this reality will put the ruble under pressure, the analyst said.
According to him, the fall of the hryvnia is mainly caused by the uncertainty of further developments, the broken Ukrainian economy and, in general, a greater interest in getting rid of this currency. Not even exchange offices and some banks want to accept hryvnias much since the beginning of the invasion, Hájek added.
“Since the start of the war in Ukraine, we have seen very strange turbulence in the foreign exchange markets, aided by the unusual combination of the start of the war and the rise in global inflation. As a result, we find ourselves at the beginning of a cycle of increasing interest rates and the need to slow the growth of the economy, while skyrocketing energy prices threatened its viability,” he described the situation at the Hájek markets.
The fear and nervousness that spilled over into financial markets, combined with rising inflation and interest rates, caused a massive spillover from more exotic currencies into the US dollar, he said. Eastern European currencies, including the Czech crown, recorded the largest outflow of capital. The euro also began to weaken significantly against the dollar, where the fall of the euro intensified the growth of the dollar. The latter has remained a safe haven, as the American economy is the largest in the world and is perceived by investors as the safest, Hájek said.
He recalled that the most traded currency pair even reached below parity during 2022, but by the end of the year, thanks to better prospects for the development of the economy, the euro managed to strengthen significantly. Since the beginning of the invasion of Ukraine, the euro has lost 5.82 percent against the dollar to 1.0648 EUR/USD, the analyst said.
Paradoxically, according to Hajek, one of the biggest gains since the beginning of the war conflict was recorded by the Russian ruble. He stated that his primacy, however, makes sense only after a closer look after a bunch of sanctions and restrictions on the Russian economy. The sanctions cut Russia off from Western countries, so the import of goods almost stopped working. At the same time, state revenues grew due to high gas and oil prices, which increased the foreign surplus and pushed the ruble to strengthen. It has strengthened against the US dollar by 8.53 percent to 74.46 rubles per dollar since the beginning of the war, Hájek added.
