This year’s forecast of 3 percent expansion of Czech gross domestic product can be attributed to an intervention to weaken the crown by the Czech National Bank in November, the bank’s vice governor Vladimír Tomšík said on a Czech Television discussion show on Sunday. Mr. Tomšík said the central bank aimed to ensure the currency remained at above 27 to the euro through 2016 and would intervene again if necessary to achieve this. The head of the Bohemian-Moravian Confederation of Trade Unions, Josef Středula, said the intervention had harmed employees and that the Czech National Bank’s claim it would create 30,000 jobs had proved false.
President Miloš Zeman suggested during a press conference following a meeting with representatives of Czech and Moravian Trade Unions Confederation (ČMKOS) on Thursday that the Czech National Bank may be devaluing the crown in order to avoid entering the Eurozone. Zeman has been critical of the national bank’s decision ever since it announced it was going ahead with the weak crown policy last autumn. But his comments have been dismissed by some economists.
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Financial analysts have dismissed as nonsensical President Zeman’s claim
that the Czech National Bank may have devaluated the Czech crown with the
intention to delay the country’s entry to the Eurozone. President Zeman
said at a press briefing in Prague on Thursday evening that the bank may
have taken this step because after the adoption of the euro the Czech
central bank would automatically cede a significant part of its powers to
the European Central Bank. The bank board members have refused to comment,
but financial analysts have dismissed the notion pointing out that the
board members term in office would expire before the country could join the
The Czech National Bank launched forex interventions in November of last year citing the need to avert the threat of deflation. It plans to continue the interventions until 2016. The move has come under fire from a number of economists and has repeatedly been criticized by the president.
A charity run to raise money for the families of the five Czech soldiers killed in Afghanistan at the beginning of June will take place on Saturday in the town of Chrudim, the site of the military base where four of them trained. The 3-kilometre run, in which many of their fellow servicemen will take part, is to start from the Cloister Gardens on Ressel Square at 10 pm and will end outside the barracks of the 43rd Airborne Mechanised Battalion in Chrudim. It is the last of a series of charity events which raised 4.5 million crowns for the soldiers’ families.
The government working group tasked with cushioning the impact of the Ukraine crisis and escalating sanctions on Czech companies has proposed state help for firms putting employees on short-time work as its main recommendation. The group argues such help could avoid massive lay-offs if the worst happens with the framework in place for future emergencies as well as the current one.
Czech food producers on Monday estimated that Russian sanctions could cost them 250 million to 300 million crowns by the end of this year. The biggest impact is expected to be felt by producers of dairy products with dried milk and cheese among the main exports to Russia. Czech producers also fear the impact of goods from other EU countries being diverted to the Czech market forcing food prices and their earnings lower. Companies selling rabbit meat, meat pastes, poultry meat and butter are also expected to be hard hit.
Foreign exchange agencies and bureaus are continuing to use sharp practices and giving out misleading information according to a report Monday by the Czech News Agency. It said that the Czech National Bank had so far this year received 135 complaints about their activities. During the whole of 2013 the central bank dealt with 218 cases and in the worst cases imposed a total of almost one million crowns in fines, mostly on agencies active in the capital, Prague. Most of the complaints are about inadequate information about exchange rates and misleading details of charges.
Farmers and service providers are continuing to curb inflation according to the latest figures from the Czech Statistical Office. Prices of agricultural products in July dropped by 2.5 percent over the month with the prices of market services falling by 0.6 percent. Prices of goods at factory gates on the other hand rose by a modest 0.3 percent and construction prices were unchanged. Over the last year, costs of agricultural products are down by just over 3.0 percent and industrial goods are almost unchanged.
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