Crown gains against dollar

The Czech crown traded below 17 Kč to the U.S. dollar for the first time since September 2008, closing April 11 at 16.93 Kč, according to the Czech National Bank (ČNB).

The crown has also firmed recently against the euro, closing at 24.44 Kč to the euro April 11 and outperforming regional currencies, which have all suffered slight losses against both major currencies. That the currency has maintained its growth even in the face of the government's recent turmoil is perhaps explained by the situation's complexity, Markéta Šichtařová of Next Finance said.

"The crown even managed to ignore the unusually uncertain situation on the Czech political scene. However, that is not so surprising after all," she said. "The fact that it is unclear causes currency dealers, especially the foreign ones, to lose orientation and ... therefore fail to react."

The crown's growth has helped allay the growing price of fuel. The price of Brent crude oil has grown 65 percent in the past few months in dollar value, to $123 per barrel, but the increase here in crowns has been 45 percent in the same period.

Nevertheless, oil prices have soared domestically. According to data published by the Czech Statistical Office (ČSÚ) April 11, the average selling price of Natural 95 gasoline reached 34.22 Kč per liter, the highest-ever average price. Diesel has reached an average price of 33.80 Kč.

Also failing to have much of an effect on the crown's exchange rate was March's inflation data, which the ČSÚ announced to be 1.7 percent. The data came as a surprise, with the ČNB forecasting a rate of 1.9 percent and analysts polled by Reuters estimating 1.8 percent.

ČSÚ said a price drop in recreation and culture compensated for inflationary pressure from transport, clothing and footwear price growth and energy and oil. Food prices were pushed upward by price growth in milk, yogurt, oils and fats, potatoes and coffee, the office said.

The crown has even more room to appreciate in the next week, Šichtařová added, because of expected developments abroad. In the long term, she expects the crown to reach 23.50 Kč to the euro in the first quarter of next year. Because of recent problems in the eurozone, she said, the news doesn't look as good for the euro.

"Due to the fact we do not expect there will be very optimistic news for the euro this week, I'm inclined to bet on the dollar to appreciate," she said.

Claire Compton can be reached at
ccompton@praguepost.com