Financial analysts are advising individuals planning substantial currency exchanges for their summer vacations to act promptly. Projections for the first half of the year suggest that the Czech koruna is likely to weaken, potentially reaching the 25 korunas per euro threshold. Currently, the exchange rate stands at 24.68 korunas per euro.

Miroslav Novák from Akcenta CZ outlines his perspective, indicating a potential natural weakening of the koruna to above 25 CZK/EUR in the first half of the year. Novák links this anticipation to the historical tendency of the koruna to weaken during periods of domestic economic stagnation or decline. Should the domestic economy remain subdued for an extended period, the weakening of the koruna is expected.

Dominik Rusinko, an analyst at ČSOB, shares a similar outlook, predicting that selling pressures will dominate the koruna market in the initial half of the year. These pressures are anticipated to stem from the narrowing interest rate differential between the koruna and the euro and the dollar.

However, the latter half of the year could witness a reversal for the Czech currency. Both Novák and Rusinko foresee a return to the 24.50 koruna level, contingent upon an improvement in the condition of the Czech economy and the external environment.

Several factors will influence the koruna’s exchange rate this year, including potential rate reductions by the Czech National Bank and the expected resurgence of domestic industry and exports. Another significant factor is the government’s decision regarding the inclusion of the koruna in the ERM II exchange rate mechanism next year. This mechanism, a precursor to adopting the euro, involves fixing currencies to the euro within a fluctuation band and could significantly impact the koruna’s performance.

As individuals plan for their summer vacations, staying informed about these currency trends and considering timely exchanges could help mitigate potential losses due to the anticipated fluctuations in the koruna’s value against the euro.

Article by Prague Forum