June 8 (Bloomberg) -- The Czech koruna weakened, snapping a four-day rally against the euro after data confirmed that the country’s recession deepened in the first quarter and exports from Germany contracted in April more than analysts expected.
The koruna depreciated 0.6 percent to 25.468 per euro as of 4:46 p.m. in Prague, paring weekly gains to 1.2 percent.
Gross domestic product shrank 0.8 percent from the previous quarter, the Prague-based statistics office said today, adding to pressure on the central bank to reduce interest rates. Exports from Germany, Europe’s biggest economy, dropped 1.7 percent from March and industrial output in Italy declined as the region’s worsening debt crisis curbed demand. The euro area is the biggest buyer of Czech exports, which account for about 75 percent of Czech GDP.
“GDP data support an idea of the Czech National Bank’s rate cut,” said David Marek, chief economist at Patria Finance AS. The Prague-based brokerage estimates the economy will shrink 1 percent this year, Marek wrote in an e-mail to clients today.
Global stocks and oil fell after Federal Reserve Chairman Ben S. Bernanke damped expectations for monetary stimulus in the world’s largest economy and Fitch Ratings reduced Spain’s credit grade.
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