President Havel officially appointed Zdenek Tuma as central bank Governor and Ludek Niedermayear as Vice-governor yesterday despite objections of the cabinet. He also named Michaela Erbenova and Jan Frait as members of the CNB´s board. Nevertheless, game is not over. A law battle will began because the cabinet found a new explanation of the part of the constitution related to the appointment of Governor and Vice-governors of the central bank. Today, even the constitution experts are divided on the explanation of the law.
The President contra cabinet quarrel affected yesterday’s trading on the FX market. The Czech koruna reflected worries about the instability of the central bank and quickly dropped to 34.72 to the euro from 34.42 in the morning. The Czech currency was also hit by the recovery of euro against the dollar and yen. Late on Wednesday the Czech koruna stood at 34.64 to the dollar. The CZK/USD exchange rate remained almost unchanged at ended at 40.31 late on Wednesday.
The fixed-income market was flat yesterday with yield of the longest state bond 6.40/10 shifting slightly up while the 6.75/05 bond was unchanged.