* Czech crown jumps after CNB scraps currency cap
* Crown on track for biggest one-day rise in 5-1/2 years
* Euro falls on dovish Draghi comments
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, April 6 (Reuters) - The Czech crown surged almost 1.5 percent to its highest level against the euro since November 2013 on Thursday, after the country's central bank scrapped the cap on the currency it had in place for 3-1/2 years.
Investors had been alert to the possibility that the Czech National Bank could end the intervention regime that has kept the crown on the weak side of 27 per euro as soon as Thursday, meaning the fallout from the move was relatively limited, with little spillover into other currencies and markets.
The crown, though, was on track for its biggest one-day rise against the euro since October 2011, having see-sawed after the announcement - first rising sharply, then falling back, then surging again. Against the dollar, it jumped 1.6 percent.
By 1150 GMT it was trading at 26.70 crowns per euro, up 1.3 percent on the day, having weakened to 27.16 crowns in the minutes following the announcement.
The central bank reiterated it would be ready to step into the market if it needed to smooth excessive currency swings, though it has said it would not reveal any potential intervention levels.
While some traders and strategists speculated that the CNB might already be intervening, ING's head of rates and currency strategy in London, Petr Krpata, said that was unlikely at the current levels.
"We think the CNB would only intervene if you saw excessive moves, like around 10 percent," he said. "They'll be very comfortable about a trading range of between 1.25 and 1.29 (crowns per euro), so we don't think they're intervening."
The CNB's balance sheet showed on Thursday that the central bank's foreign assets - which serve as a rough guide to the bank's purchases of foreign currency - had grown by 8.5 billion euros in March.
The fact that the CNB would not be buying so many euros from now on would not be enough to pull down the euro against any currency other than the Czech crown given the size of the $5 trillion-a-day currency market, said Sandra Strissler, an emerging markets currency strategist in Frankfurt.
"It's a small market; it's not very deep, so the reaction will be limited," she said.
The euro edged down to $1.0659, close to a three-week low hit earlier after the head of the European Central Bank said he saw no need to deviate from the ECB's policy path, which includes record-low interest rates and bond-buying until at least the end of the year.
The single currency had jumped above $1.09 in March for the first time since early November, after ECB chief Mario Draghi signalled a diminishing urgency for expansionary policy, with investors moving to price in a chance of an interest rate hike in early 2018.
But ECB policymakers have since indicated that markets moved too far in pricing in policy tightening.
Draghi continued in that vein on Thursday, saying that before altering its policy stance, the ECB must have sufficient confidence that inflation would return to target over a medium-term horizon, even when the central bank's expansionary policy was scaled back.
"Draghi made it very clear that he’s not intending any change in the forward guidance, that policy still needs to remain expansionary for a very long time, and the more positive outlook depends on this expansionary stance," said Commerzbank currency strategist Esther Reichelt, in Frankfurt.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Toby Davis)