The growth is fueled by a strong regional and European economy and the United States' bursting housing bubble. "The dollar is falling like a stone," said Miroslav Plojhar, a Citibank economist.

As a result, Czech consumers this holiday season will benefit from flat interest rates and cheaper prices for oil, gas and goods imported from Asia and Africa. Meanwhile, exporters will feel a crunch as they face ramped-up competition that may cause an increase in unemployment.

The crown set record highs in November, ending the month trading at 21.05 Kč per dollar and 27.89 Kč against the euro, the latter down slightly from a high set earlier in the month. Growth should continue in December, with one analyst expecting the currency to reach 20.65 Kč to the dollar.

Within one year, the crown's value against the dollar has grown by 15 percent, breaking record highs previously set after the country's accession to the European Union in 2004.

So far, the lack of government leadership and economic reform has not stopped the crown's rise.

"The Czech currency has proven to be immune to political turmoil," said Petr Dufek, an analyst for ČSOB.

Any concerns about the Czech Republic held by investors has so far been mitigated by growth in the country's gross domestic product (GDP), a stable inflow of foreign investment and general optimism about the future of Central Europe. But this free pass is not guaranteed to continue.

"The market will expect some progress in reforms," Plojhar said.

Previous attempts to reform the healthcare and pension systems have found strong opposition, said Vladimí­r Pikora, chief economist of Next Finance. Without public finance reform in these sectors, he said, the deficit will become uncontrollable and the country will start sinking in the economic water it's been treading.

Pikora said he would not be surprised if the major international credit rating agencies eventually cut the country's rating, citing the fact that the government hasn't done anything to improve finances in the past few years.

"How long will they resist?" he said. "It could be in February, March or May. It depends on the political situation. Maybe an agreement will be found and politicians will at least attempt some reforms."

While they can, residents of the Czech Republic should enjoy their increased purchasing power. Gains against the dollar do not stop at U.S. borders, as many Asian and African countries use the dollar for international trade, bringing "cheaper goods and other raw materials from these companies," said Dufek, "including cheaper electronics and textiles."

Oil and gas are also sold in dollars, with oil now under 28 Kč per liter (1.06 quarts) and getting cheaper by the week, Pikora said.

Another benefit of the crown's rise was seen Nov. 30, when the Czech National Bank opted not to raise the country's interest rates, said Michal Brožka, an analyst for Raiffeisenbank. The strong currency tamps down inflationary trends without raising interest rates, a situation that could continue for several months.

Companies that export goods are finding that the crown's growth is putting a squeeze on their margins, Plojhar said, as their competitive edge against Asian and African countries is dulled.

"A couple years ago, if you produced shirts and exported them for $10, you'd get 320 Kč," Pikora said. "Now, you get 210 Kč."

Some exporters saw this trend approaching and have invested in foreign currency as a hedge against it, but unprepared companies will have to cut costs in the country by "firing some people, buying new technology and trying to be more efficient," Pikora said.

The crown may be gaining too fast against the dollar, and this may lead to a decline in exports and a rise in unemployment as Czech exporters fail to adapt. This could eventually cause a drop in GDP. Some analysts are less fearful of this scenario.

The crown will not grow as fast against the dollar next year, Plojhar said. Citibank projects total growth through 2007 of only 2 percent to 3 percent as the dollar levels out against the euro.