PRAGUE, Sept 8 The Czech Finance Ministry
converted around 433 million euros to crowns through the central
bank last month, accounting for only a fifth of the growth in
the bank's foreign reserves that month and indicating the bank
raised its euro buying in the market.
The bank's foreign exchange reserves jumped by 2.1 billion
euros in August, the highest monthly rise since February.
The ministry told Reuters on Thursday its conversions
through the bank related to inflow of European Union funding
programmes accounted for 11.7 billion crowns, or 433 million
The rise in central bank reserves is affected chiefly by
interventions, conversions for the ministry as well as
investment returns and valuation changes. The bank's reserves
stood at 70.5 billion crowns in August.
The relatively small size of the ministry's conversions
indicates increased intervention activity in August, after the
bank bought foreign currency worth 307 million euros in the
August interventions data will be released on Oct. 7.
The bank has held the crown on the weak side of 27 per euro
since 2013, having to intervene in most months since mid-2015 by
selling crowns and buying euros.
The bank's board expects to end the weak crown policy in
mid-2017, increasing market focus on a widely expected firming
in the currency when the peg is dropped, and raising
expectations the bank will have to intervene more heavily in the
coming months as investors are attracted into the currency.
The bank has said it would not allow any sharp currency
firming after it drops the peg and would intervene as necessary
to smoothen out swings.
(Reporting by Jan Lopatka; Editing by Jason Hovet)