High volatility around Czech Republic Koruna following CNB decision to remove cap

The Czech National Bank has announced today it has removed the peg between the Koruna and the Euro at around 27.0.

It is worth recalling that the CNB has introduced this measure in late 2013 in order to prevent the domestic Koruna to appreciate too much vs. the single currency and thus spark disinflationary pressures.

In the wake of the decision, EUR/CZK quickly rose to levels above 27.16, just to drop near 26.70/80 soon afterwards, where it is now looking to consolidate.