ECONOMIC BRIEFS

Czech crown shaken, Slovak crown saved by NBS

On May 26, the Czech Central Bank (CNB) cancelled the fluctuation spread for the Czech crown (up till now +-7.5 percent). "So far no fluctuation spread was set," said the CNB. The Czech exchange rate liberalization will most likely be accompanied by the stoppage of central bank interventions, on which the Premier Vaclav Klaus indirectly commented ("today the financial markets play against us and fighting with them was too costly for the Czech Republic.") Foreign press agencies evaluate the cancellation of the fluctuation spread as freeing the way to devaluation of the Czech crown. According to analysts, the loosened conditions will soon translate into an intense devaluation of the Czech crown, ca by 15-20 percent. The pressure on the Slovak crown, as with the Czech crown, ceased on May 26. "I think the cessation was not only because of holidays in the main financial centers in New York and London," said Peter Koprna, SLSP chief dealer. According to him the calming of the situation was brought on mainly through the very good reactions of the NBS, whose measures did not cause the domestic banks to incur losses. Thus, the banks did not have to act against their own currency. The Slovak crown exchange rate oscillated around 1 percent in the devaluation zone on May 26. According to Koprna, foreign speculators do not already have positions in Slovak crown large enough to compel the devaluation of the Slovak crown.

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