The koruna reacted to Wednesday’s appointment of three new ČNB board members by strengthening slightly by 0.15 percent to CZK 24.65 to EUR, up from CZK 24.69 to EUR, where it was before 15:00, XTB analyst Štěpán Hájek said. The reason, he said, was the easing of the slight tension surrounding the personnel changes in the central bank’s management.

“The impact on the koruna exchange rate was less this time than when Ales Michl was appointed governor on May 11,” said Akcenta analyst Miroslav Novák. In his opinion, the explicit statement by President Miloš Zeman regarding the involvement of foreign exchange reserves as a monetary policy tool in the fight against inflation may have indirectly helped the koruna to strengthen.

“Zeman has chosen a sense of continuity in appointing three new ČNB board members today,” says Tomáš Kudla, Ebury’s sales director for the Czech Republic and Slovakia. He says the ČNB board could change its rhetoric to a more dovish one in the future, i.e., against raising interest rates.

According to Hájek, Zamrazilová could side with the new governor, Ales Michl, and take a dovish stance against further rate hikes. After all, higher rates make the accumulated state debt more expensive, something she fought so hard against as the National Budget Council chairwoman,” he said.

“Kubelková, as an analyst at the Czech Chamber of Commerce, could also join the side of the doves. That is, an institution monitoring the potential problems of higher rates for entrepreneurs, “he added.

Since the last rate hike was backed by new models, according to outgoing governor Jiří Rusnok, which may have involved the newly appointed CNB board member Jan Frait, the hawkish side may gain another member, Hájek pointed out.

Zeman appointed Czech National Bank (ČNB) deputy governor Eva Zamrazilová (61), chairwoman of the National Budget Council, and Karina Kubelková (38), chief analyst of the Czech Chamber of Commerce and adviser to Prime Minister Petr Fiala (ODS), and Jan Frait (56), director of the CNB’s financial stability section, as new members of the bank’s board.

They will replace the current Governor, Jiří Rusnok, Deputy Governor Tomáš Nidetzký, and Board Member Vojtěch Benda.

Source