Czech officials in talks on crown strength

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The Czech central bank is in talks with the country's finance ministry on fighting the impact of the crown currency's strength, a spokesman said on Tuesday.

The central bank spokesman said the aim was to set up a special account where the government's foreign currency income from privatizations would be deposited, rather than converted into the domestic currency.

The approach would be similar to what the central bank and the government had done in the past with proceeds from the sale of the former Czech telephone monopoly, spokesman Pavel Zubek said.

He said the finance ministry seemed willing to cooperate but the timing of when the plan could be agreed would depend on whether minister Miroslav Kalousek wants the entire cabinet to consider it.

Zubek confirmed comments on the matter in daily E15 by central bank Vice-Governor Mojmir Hapl.

“I can confirm that there are negotiations on an agreement between the Czech National Bank and the Finance Ministry on how to fight the consequences of the fast appreciating crown,” the E15 quoted Hampl as saying.

It also wanted the government to refrain from issuing eurobonds, it said.

The crown has jumped by 10% to the euro over the past year, in local currency terms, on strong economic growth, exports, and a narrowing negative interest rate differential to the euro zone. (finance.cz)

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