The Czech crown is experiencing its strongest levels in 15 years against the euro and over a year against the dollar. The crown strengthened by 15 pennies against the euro to reach 23.34 CZK/EUR, while against the dollar, the crown improved by 27 pennies to reach 21.26 CZK/USD. This follows data on the Patria Online server, which has shown a gradual strengthening of the crown against both main world currencies since last autumn. During that period, the rate to the euro was almost 24.70 CZK/EUR, while the rate to the dollar was over 25.70 CZK/USD. The Czech currency recorded a short-term weakening in the first half of March but has been strengthening again in recent weeks.

However, the strong crown is not necessarily good news for exporters. Czech companies that export goods may see their revenues suffer as a result of the strong crown. Exporters earn profits in foreign currencies and convert them back to crowns, so the strong crown means they receive fewer crowns for each unit of foreign currency earned. Some companies may also face difficulties in fulfilling orders, as they may become more expensive for foreign customers due to the strong crown.

On the other hand, the strong currency could have benefits for consumers, as it could reduce the price of imported goods and make foreign travel more affordable. It could also reduce inflationary pressures, as imported goods become cheaper. The strengthening of the crown is also in line with the country’s improving economic outlook. The Czech Republic has been recovering from the COVID-19 pandemic, and its economy is expected to grow by over 3% this year, following a 5.6% contraction in 2020.

However, the strengthening of the crown could also be temporary, as it is subject to various factors such as changes in global sentiment and economic developments. Analysts suggest that the central bank could take action to weaken the currency if it becomes too strong and starts to harm the country’s exports.

Article by Prague Forum