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Czech Koruna Erases Gains as Fitch Cuts Outlook to ‘Stable’

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Dec. 13 (Bloomberg) -- The koruna erased gains after Fitch Ratings cut the Czech Republic’s outlook to “stable” from “positive.”

The Czech currency weakened less than 0.1 percent to 25.661 per euro at 5:08 p.m. in Prague after earlier strengthening as much as 0.5 percent. The PX index of stocks closed 0.2 percent higher at 862.2 before the Fitch statement.

Fitch, which reaffirmed the country’s A+ assessment, said the outlook revision reflected the deterioration of the growth outlook in the euro area, the Czech Republic’s main trading partner.

Czech gross domestic product growth “has already slowed to a virtual standstill,” Michele Napolitano, a Fitch director, said in a statement. “The 2012 deficit is likely to slightly overshoot the government’s forecast, given an optimistic growth assumption.”

The koruna strengthened earlier today after a Czech central banker said further interest rate cuts wouldn’t help the economy and a report showed that investor confidence in Germany improved.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Linda Shen at lshen21@bloomberg.net

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