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Currency rate changes

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By: Lucie Tesarova

Currency rates movements

Weaker dollar makes imported cars more expensive for U.S. consumers1 and lowers the prices of
imported cars for the Czech consumers.

Imported goods is generally getting cheaper for the Czech consumers as well due to the strengthening of
the Czech currency, koruna. As inflation rates accelerated2, speculators are predicting rising of interest
rates, which increased demand for Czech koruna and therefore makes the currency even stronger.

Economists predict further strengthening of the Czech koruna. Ten years ago in 1997, Czech koruna was
valued 42CZK/USD. On December 11, 2007, it was 17.747CZK/USD3. I wonder what the rate will look like
in another ten years.

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Author: ČTK. (ČTK)
18:01 - 10.12.2007

Czech crown breaks through Kc26/EUR for 1st time ever today

Prague- The Czech crown broke through the level of Kc26.0/EUR for the first time in history
today and even traded for Kc25.93/EUR, pulled by data on November inflation which is the
highest in over six years, according to info of server Patria Online.

Vis-a-vis the US dollar, the crown moved the record to Kc17.65/USD.

Around 5:00 p.m., the crown's rate stood at Kc26.0/EUR and Kc17.68/USD.

"The high inflation provoked a justified suspicion among speculators that interest rates will be
raised any time soon, and the crown therefore immediately started to grow sharply. Everyone
was trying to take advantage of the situation and was buying crowns," Next Finance analyst
Vladimir Pikora said.




1
 Bunkley, Nick: European Automakers Likely to Build Plants in United States. The New York Times.
http://www.nytimes.com/2007/12/11/business/worldbusiness/11auto.html?_r=1&ref=business&oref=slogin.
2
 Czech crown breaks through Kc26/EUR for 1st time ever today.
http://www.financninoviny.cz/english/index_view.php?id=286128.
3
    Rates according to the Czech National Bank: http://www.cnb.cz/en/
Everyone knows that the Czech National Bank (CNB) needs a stronger crown and so they do not
fear to speculate. In the course of the week, the crown may firm further in order to correct to
weaker levels only shortly before the holidays, he added.

The domestic data were overshadowed by external factors, Patria analyst Tomas Vlk noted,
adding that these factors were also rather positive.

Share markets headed upwards after the morning's hesitation and the US dollar was falling. This
development should be favourable for Central Europe, but the Polish zloty and the Hungarian
forint still saw only a very small change, Pikora said.

The dollar fell to $1.4715/EUR. Without new important data, the dollar was losing what it had
gained at the end of last week.

The market will focus mainly on tomorrow's meeting of the US Fed where interest rates are
expected to be cut, Vlk noted.

Year-on-year inflation in the Czech Republic accelerated to 5 percent in November from 4
percent in October, the highest figure since August 2001. Prices of food and soft drinks
contributed the most to the acceleration, the Czech Statistical Office (CSU) said today.

                                                                           Author: ČTK. (ČTK)
                                                                            18:01 - 10.12.2007

				
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Description: Thoughts on Currency Exchange Rate Changes and it's correlation to import/export