The crown has reached its weakest point in relation to the euro since December, according to recent numbers released by the Czech National Bank (CNB). Photo: Pixabay

Brno, May 27 (BD) – The Czech crown experienced a drop of 0.6 percent against the euro to fall to 25.81 on Wednesday, its weakest value since late December (25.84 crowns to the euro – ECB website, December 27, 2017).

The crown continued to fall short of previous projections by the CNB. The latest rates on European Central Bank (ECB) charts are consistent with the CNB reports and portray a similar trend in the performance of the crown against the euro.

ECB Exchange Rate EUR vs CZK (22-11-2017-24-05-2018)

Recent developments in the local currency’s exchange rates against the euro are causing speculation that increases in interest rates by policymakers will become necessary earlier than originally projected, says Shoaib Ur Rehman from Business Recorder (“Czech crown drops 0.6 percent, weakest since December”, published 23/5/2018).

An earlier than expected increase in interest rates could lead to a slow down in economic growth. An increase in borrowing costs can lead to limited growth in consumer spending, meaning higher interest rates could reduce economic growth in the Czech Republic.

The performance of the Czech crown is a factor that directly affects the development of Czech interest rate policies. A less than projected appreciation of the crown against the euro and its effects on interest rates may result in a slight decrease in Czech economic growth in the near future.

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