Moments ago the Czech Republic officially entered the global currency wars with the first currency intervention in 11 Years
- CZECH CENTRAL BANK APPROVES KORUNA INTERVENTION
- KORUNA WEAKENS 3.2% VS EUR AS CENTRAL BANK OKS INTERVENTION
- CZECH CENTRAL BANK SAID TO BUY EUROS IN MARKET
This has led to the biggest Koruna drop in 4 years. Whoever was long the EURCZK, take the rest of the day off:
[4]
Some more from Bloomberg:
- Czech central bank board approves start of currency interventions at monetary-policy meeting today, bank says in statement on its website.
- Bank says will intervene to keep koruna to near 27/EUR in statement announcing decision
- Bmark 2-wk repo rate left at what bank calls “technical zero” of 0.05%
- All 19 analysts in Bloomberg survey forecast bmark interest rate will be kept unchanged
- Ceska Narodni Banka to hold news conference at 2:30pm in Prague
Full statement here [5]:
CNB keeps interest rates unchanged, decides on interventions
The CNB Bank Board decided at its meeting today to keep interest rates unchanged. The two-week repo rate was maintained at 0.05%, the discount rate at 0.05% and the Lombard rate at 0.25%.
The Bank Board also decided to start using the exchange rate as an additional instrument for easing the monetary conditions. The CNB will intervene on the foreign exchange market to weaken the koruna so that the exchange rate of the koruna against the euro is close to CZK 27.
The history of the settings of the main instruments of monetary policy and the Bank Board minutes are available at
http://www.cnb.cz/en/monetary_policy/instruments/index.html#mpi [6]
http://www.cnb.cz/en/monetary_policy/bank_board_minutes/index.html [7]
Repo rate: The CNB’s key monetary policy rate, paid on commercial banks’ excess liquidity as withdrawn by the CNB in two-week repo tenders.
Discount rate: A monetary policy rate which as a rule represents the floor for short-term money market interest rates. The CNB applies it to the excess liquidity which banks deposit with the CNB overnight under the deposit facility.
Lombard rate: A monetary policy interest rate which provides a ceiling for short-term interest rates on the money market. The CNB applies it to the liquidity which it provides to banks overnight under the lending facility.