EUR/CZK: Next To Pull The Peg? **UPDATE**
Neal Gilbert | Feb 18, 2015 03:46PM ET
We interrupt this original article indicated that the change may come from the Czech National Bank during their February 5 meeting, that didn’t come to fruition. In fact, they remained as steadfast as ever in defense of their floor, however, those who made that decision may not be at liberty to do so in the near future. A longtime opponent of the floor, Czech Republic President Milos Zeman, said today that he would be appointing someone to head the bank whom was more in line with his beliefs on the subject when that time comes. The only problem is that the appointment won’t be coming until July 2016.
Regardless of the timetable of the changing of the guard at the CNB, Zeman’s public pronouncement could influence the voting practices of those currently on the board; which means the floor may be in jeopardy. Adding to the intrigue is the potential of a Grexit, which could severely weaken the euro and overwhelm the CNB if the EUR/CZK falls to 27.00. If the SNB didn’t feel it had the resources to fight a euro decline, is it really logical for the CNB to believe that they do? We may soon find out as the EUR/CZK has fallen over 400 pips today and was under 200 pips away from the floor during North American trade.
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