Czechs Play Koruna Hardball With Unlimited Interventions
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The Czech central bank’s return to currency interventions after 11 years heralds a push for a weaker koruna to ward off deflation and kick-start the economy.
The koruna sank 4.4 percent to 26.975 per euro yesterday, its biggest-ever drop, after the central bank sold the currency in the market. Governor Miroslav Singer pledged to keep intervening “for as long as needed” to spur inflation, setting a target of “near” 27 per euro, a level last seen in 2009. The koruna was little changed today, while its implied volatility fell to the world’s lowest, along with the Swiss franc.