President Zeman urges for Czech koruna strengthening

Czech PresidentZeman urges strong national currency and criticizes the national bank’s weak-currency policy for making Czechs poorer in euro terms.

Czech coins | Photo courtesy of Igracek EFKO

Czech coins | Photo courtesy of Igracek EFKO

Czech President Milos Zeman expressed his opinion that the country should support strengthening of the national currency. According to his statement, strong koruna is a prerequisite for competitiveness and labour productivity.

Zeman refuses currency weakening comparing the rate-setting to a “pillow” which gives Czechs a false sense of comfort while losing motivation for innovations. Zeman also points out that the advantages of weak currency for exporters are only short-termed.

The Czech leader suggests that the interventions should not be ended at once as it would probably lead to a sharp change in a course as happened in Switzerland.

CNB performs interventions in foreign exchange markets since November 2013 and is considering to end their usage in 2016 or 2017.

According to Jiří Rusnok, who is a CNB Board member and who repeatedly backed reasons to maintain a cap on currency gains, the bank will not allow significant course fluctuations after the intervention regime ends.