The central bank bought 405 million euros in order to decrease the value of the kuna.
The Croatian National Bank (HNB) intervened in the foreign exchange market on Thursday and bought 405.5 million euros at an average exchange rate of 7.453515 kuna per one euro from the banks, bringing more than three billion kuna into the system, reports tportal.hr on January 5, 2018.
Although the year is at its very beginning, the Croatian National Bank had to intervene in the foreign exchange market in an effort to prevent the appreciation of the kuna. The kuna was strengthening against the euro for the last ten days, and the exchange rate of the central bank had slipped to 7.44 kuna for one euro.
At the end of last year and the beginning of this year, the average exchange rate of the euro was 7.513648 kuna. However, on the very first workday of the new year, 2 January, the kuna strengthened by 0.84 percent, and the exchange rate fell below 7.5 kuna to 7.450471 kuna.
The strengthening of the kuna against the euro continued on 3 January, by just 0.004 percent, while on 4 January the kuna strengthened by additional 0.09 percent, so the average exchange rate of the euro fell to 7.442707 kuna.
During 2017, the Croatian central bank intervened five times in the foreign exchange market, each time by buying foreign currency from commercial banks and trying to keep the kuna from strengthening too much. In the five interventions last year, it purchased 947 million euros from commercial banks.
The last intervention took place in mid-December last year when the HNB bought 345.5 million euros from the banks at an average exchange rate of 7.5605 kuna per euro.
The latest intervention is also one of the central bank’s largest interventions over the past 18 years. The most significant intervention so far occurred at the end of 2016 (28 December 2016), when the Croatian National Bank bought 438.3 million euros from the banks, at an exchange rate of 7.564733 kuna.
A stronger kuna benefits importers and retailers, while a weaker kuna is beneficial for exporters and the tourism industry since it makes Croatian prices lower in foreign currencies.
Translated from tportal.hr.