The Czech crown hit its highest level since 2012, gaining in new year trading from higher interest rates and data showing stronger manufacturing sentiment.
The Czech crown added 0.32% and was trading at 24.820 to the euro after earlier breaking the key level of 24.774 and rising to its strongest since October 2012.
The currency has been steadily firming since a hefty interest rate hike on Dec. 22.
“The market is rather illiquid today, but it can be expected to further strengthen, as it usually happens at the start of a year, that ‘missed train syndrome’ that some may want to jump on,” an FX trader in Prague said.
PMI data published in the Czech Republic also showed growth with output and orders rising the most in months, although supply snags and rising prices spelled uncertainty for the year ahead.
At its pre-Christmas meeting, the central bank raised the key interest rate by one percentage point to 3.75 percent, trying to dampen expectations that consumer prices will continue to rise rapidly. The CNB’s key interest rate is thus the highest since 2008.
The koruna reacted to the increase in interest rates by strengthening between the holidays. On Tuesday, December 28, for the first time since the beginning of the coronavirus epidemic in the Czech Republic, it closed trading below CZK 25 / EUR.