Final Word from Thursday, November 4, 2021

Sunday is the anniversary of the Great Devaluation of the Czech Crown. Czechs have mostly forgotten about the currency intervention that ran from Nov. 7, 2013, to April 6, 2017. Jiří Rusnok and other central bankers certainly don't like to speak about it, partly because they never reversed the devaluation. They pumped the equivalent of nearly two state budgets into the economy and never withdrew the extra crowns. Now, for the first time, there are plans to start tapering. The CNB announced on Oct. 21 that, as of Jan., it will begin selling part of the proceeds it earns from its foreign reserves and that the "transactions will be executed in such a way that their impact on the exchange rate is minimal." This could mean that it will match its sales with the outflow of the government-bond income of foreign investors, as Vojtěch Benda and Jakub Matějů of the CNB suggested in HN on Sept. 15. But what if it actually means that the CNB will buy crowns in such a way that the impact on the projected exchange rate is minimal? (The CNB forecasts a rate of Kč 24.10 as of the end of 2023.) Isn't this more in the style of Revaluation Rusnok? [ Czech Republic VŘSR VDČK euro ]

Glossary of difficult words

to taper - to reduce gradually; to reduce the rate at which a central bank accumulates new assets on its balance sheet under a policy of quantitative easing.

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