PRAGUE, April 6 (Xinhua) -- At its extraordinary monetary policy meeting on Thursday, the board of the Czech National Bank (CNB) decided to end its foreign exchange intervention policy.
Discontinuing the use of the exchange rate as an additional monetary policy instrument means that the Czech koruna exchange rate will move according to supply and demand on the foreign exchange market. As a result, it may fluctuate in either direction in the short term. The CNB said it stood ready to mitigate potential excessive exchange rate fluctuations if needed.
About an hour after the announcement, the Czech koruna fluctuated significantly below the exchange rate of 27 crowns per euro to 26.67 crowns per euro. The end of intervention also caused a rise in yields on the Czech bonds market.
CNB's foreign exchange intervention policy was launched in November 2013 due to fear of deflation.
