- CNB vice-governor Oldrich Dedek told CTK that the current setting of interest rates in the Czech Republic does not harm economic growth in the country. The impulse for Dedek´s statement was Monday's warning by ECB vice-governor Christian Noyer addressed to central banks in candidate countries. Noyer said that the banks should not kill economic growth in their economies as a result of their effort to bring inflation down to levels common in the Eurozone. According to Noyer, higher inflation in candidate countries reflects the desirable process of catching up with the western level of prices and income. Dedek emphasized that the Czech monetary policy has respected the specifics of the transformation price movements in the Czech economy, which is not the same, though, as to neglect inflationary risks.
- The EC has rejected the Czech program of steel sector restructuring submitted in September. Further course of action will be discussed with the Czech side in the last October decade. The EC said the submitted plan does not comprise an in-depth analysis of further development of the Czech steel industry, including verifiable financial data and prospects, and business plans of individual firms. It counts on cutting steelworks' capacity but does not explain how this will be achieved. The plan lacks an estimate of the trend of the market, exports and imports and an analysis of the return on investment. Originally, EuroStrategy of Britain sponsored by the Phare funds had won a tender for drafting the program of steel sector restructuring. The Czech government agreed with conclusions of the Eurostrategy´s study in the beginning but later rejected them telling that its own program would produce the same results but would be cheaper for the country. Closing the economic competition chapter may be among negative consequences of dragging negotiations on the issue.
- The Czech Republic is going to file a lawsuit at a Swedish court against the Stockholm arbitration court's proceedings concerning a dispute between CME and the Czech Republic. According to the Czech Ministry of Finance, arbitration award cannot be appealed, but arbitration proceedings can be questioned. The Stockholm arbitration court ruled that an agreement on mutual protection of investments between the Czech Republic and the Netherlands had been broken, and the Czech Republic should pay CME the market price of CME's investment. The arbitration court in London, which dealt with a similar dispute between the Czech Republic and CME's owner Ronald Lauder concerning the Czech-American agreement on protection of investments, did not rule that damages should be paid.
- Bivideon (a consortium of Tele Danmark and Deutsche Bank) and the National Property Fund (FNM) signed the contract for the sale of 51 % of Ceske radiokomunikace (CRa) for CZK 6.8bn. The transaction will be completed only after the anti-monopoly competition office (UOHS) approves it. Ceske radiokomunikace raised their overall revenues from CZK 2.3bn in 1999 to CZK 2.6bn in 2000 by IAS.
- The Czech crown had opened at 33.46 vis-a-vis the euro and then slightly weakened as a result of 2002 state budget draft rejection by the parliament’s Budget Committee. Against the dollar, the crown opened at 36.89 and oscillated within the range of 36.87 to 36.99 most of the day. Late in the afternoon, CZK/EUR was trading at 33.48/51, slightly down from 33.45/48 on Monday. CZK/USD closed at 36.81/83, up from late Monday’s 36.88/90.
- Bond prices slightly rose again in weak trading on Tuesday. Similarly to Monday, long state bonds drove the index up. In the non-state segment, Radiomobil 8.20/04 gained 35bps. The longest state 6.95/16 benchmark added 20bps to 107.80/10, yielding 6.11/08 %. The state 6.75/05 bond rose by 15bps to 103.60/85, yielding 5.52/44 %.
| Late on October 16 | bond yield | Late on October 15 |
| CZK/EUR | 33.48/51 | - | 33.45/48 |
| CZK/USD | 36.81/83 | - | 36.88/90 |
| State 6.75/05 | 103.60/85 | 5.52/44 | 103.45/70 |
| State 6.95/16 | 107.80/10 | 6.11/08 | 107.60/90 |
(Martin Kupka)