20 Korun – Czech Republic

In 2019, the Czech Republic's currency situation was characterized by a deliberate and sustained weak koruna (CZK) policy orchestrated by the Czech National Bank (CNB). This policy, initiated in 2013, involved foreign exchange interventions where the CNB actively sold korunas and bought foreign currencies, primarily the euro, to prevent excessive appreciation. The primary goal was to combat deflationary risks and stimulate the economy by making exports more competitive and pushing inflation toward the bank's 2% target. By 2019, this long-standing commitment was a cornerstone of the country's monetary framework.

The context for this policy was an economy experiencing robust growth, low unemployment, and rising wage pressures, which would typically lead to currency strength. However, inflation had only recently returned to target after years of being below it. The CNB, led by Governor Jiří Rusnok, repeatedly signaled that it would maintain the weak-koruna cap (set at around 27 CZK/EUR) at least until mid-2019, and likely beyond, to ensure price stability was firmly anchored. This stance created a stable but artificially suppressed exchange rate environment, which was a key topic for financial markets and businesses planning their forex exposure.

By the second half of 2019, with inflation stable and the economy strong, the focus shifted to the eventual exit strategy from the intervention regime. The CNB emphasized that any future moves would be gradual to avoid market disruption. The koruna began to show mild appreciation pressure as exit timing was debated, but it remained within the bank's tolerated range. Thus, 2019 represented the final, watchful phase of the unconventional policy, setting the stage for its anticipated conclusion in the years following, as the bank prepared to normalize monetary policy after a seven-year period of currency interventions.