Czech central bank balance sheet suggests pause in interventions in early December

PRAGUE: The Czech central bank's foreign assets dropped in the first ten days of December, the latest balance sheet data showed on Wednesday, suggesting the bank made no interventions to keep the crown weak to start the month.

The bank has intervened more heavily in recent months to keep the crown on the weak side of 27 per euro. It has maintained an intervention regime since 2013 and has said a likely end of the policy would come in mid-2017.

The bank said in a regular 10-day balance sheet release that receivables from abroad decreased by 12.7 billion crowns ($500.37 million) as of Dec. 10 from the end of November.

The data can be used only as an approximate measure of interventions, because of other factors possibly in play, like the conversions of EU subsidies which the central bank performs on behalf of the Finance Ministry.

"The data suggest that the central bank did not have to intervene in the market in early December, because the crown remained in a sufficient distance from the level of 27 crowns per euro ahead of the (US Federal Reserve) meeting," said Radomir Jac, chief economist at Generali Investments CEE.

The crown traded as weak as 27.07 to the euro in early December but has firmed back to around 27.02 this week, a level generally seen being defended by the central bank.

In October, the latest month for which official data are available, the central bank bought foreign currency worth 3.96 billion euros, the highest monthly amount since launching its weak-crown policy in November 2013.

The central bank has repeatedly said it would not end the intervention regime before the second quarter of 2017.