Koruna Gains Most in Five Months as Czech GDP Exceeds EstimatesKrystof Chamonikolas
The koruna strengthened the most in almost five months after a report showed the Czech economic recovery from the longest recession on record is accelerating.
The currency appreciated as much as 0.8 percent to 27.292 per euro, its biggest intraday advance since Sept. 26 and the strongest level since Jan. 1, data compiled by Bloomberg shows. It traded 0.4 percent higher at 27.407 by 5 p.m. in Prague.
Fourth-quarter gross domestic product expanded 1.6 percent from the previous three months after growing 0.2 percent from July to September, according to preliminary figures published by the Czech Statistics Office today. That was the fastest quarterly growth in more than six years, exceeding all 13 estimates in a Bloomberg survey of economists.
“Even if there’s later a downward revision of the data, growth is so robust that the overall picture of the Czech economy won’t change,” Pavel Sobisek, chief economist at UniCredit SpA’s Prague-based unit, wrote in a report to clients today. “The recession is definitely forgotten and the focus is now on growth and its sustainability.”
The central bank bought about $10 billion of foreign currency in November and capped any gains in koruna at around 27 per euro to ward off deflation and ensure recovery after 1 1/2 years of recession ended in the second quarter of last year.
Consumer prices rose 0.1 percent in January from a year earlier, the slowest inflation rate since October 2009, the statistics office said two days ago.
The central bank pledged on Feb. 6 to keep its intervention policy in place until at least early 2015. Growth is picking up “without any signs of inflationary pressures” and the fourth-quarter GDP figure may be “significantly revised,” board member Lubomir Lizal wrote on the central bank’s website today.
“The central bank is likely to firmly keep its view that the Czech koruna should hold the area of 27 per euro during the whole of 2014,” Radomir Jac, chief analyst at Generali PPF Asset Management AS in Prague, wrote in e-mailed comments today. Investors should wait for detailed GDP statistics that will be released on March 6 and that “may bring also some revision of headline numbers,” he said.