Koruna Rises for the Fifth Week against Euro
The Koruna of Czech is experiencing great prospects and it recorded gain for the fifth week trading against the Euro. The Czech currency also registered a record gain on the 22nd of February. This buoyancy of the Koruna is attributed to expectations that the Central Bank will be increasing interest rates. The Koruna of Czech gained the most as against the 16 most traded notes in the week that concluded. The gain of Koruna came when the policy makers increased the standard lending rate of 1.25 percentage points to 3.75% which for the EU is still the lowest rate. The forward rate agreements indicated that the bank will relax borrowing expenses still further in the face of accelerated economic growth for the fourth quarter which stood at 6.9%.
The strategist for emerging-market currency with 4Cast Ltd. in London Nicholas Kennedy said that the gain by Koruna is quite positive and he further added that traders are looking for a single reason to hold back but they cannot find one. At the end of the week, the Koruna gained by 24.990 per euro which is the record level for the Czech currency since the common currency for Europe was introduced in 1999. In Prague the Koruna stood at 25.060 and in the earlier week it had recorded 25.206. Another distinction the Koruna has gained is that it became the world’s most successful currency for this year while trading against the Euro. The Czech Koruna recorded a gain of almost 6%. The Koruna as well gained by 16.906 per dollar from its February 15 gains of 17.168. On February 18 the Czech currency moved to 24.944 however traders in the market are of the opinion that this advancement of the Koruna was mainly because of a single trade.
A trader at the biggest bank in Czech by assets Ceskoslovenska Obchodni Banks AS, David Sykora expressed that the gain is possibly a botch and it is called as the miss hit deal and cannot be termed as the record. The forward rate agreements indicate that the central bank in Prague is likely to hike to its key rate by another twenty five basis points in the coming six months. In order to curb inflation the central bank has maintained its tight monetary policy, the inflation had shot to 7.5% in January which the highest inflation in nine years.
In the other currency trading, the Lira of Turkey dropped by 0.4% in the week and stood at 1.2063 per dollar on Friday following the deployment of 10,000 troops into northern Iraq to fight terrorists of the PKK or the Kurdistan Workers’ Party. An economist with UniCredit MIB in Vienna Simon Quijano-Evans told his clients that the lira would find support from the investors residing in the country since the people supports this decision of the government. The zloty of Poland moved to 3.5692 per euro from its earlier week’s 3.5770 position. However the leu of Romania and forint of Hungary dropped against the euro.
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