EFTA01379402.pdf

22 December 2017 EM Currency Handbook 2018: Still Fuel in the Tank Czech Republic The Czech koruna (crown) replaced the Czechoslovak USD/CZK and EUR/CZK exchange rates koruna at par on 8th February 1993. The koruna has 350 300 been free floating since Jan 1997, when the managed JO 0 float regime was abolished. Prior to January 1997, the 25 0 koruna was managed against a basket of USD and ZS 0 100 DEM with intervention bands of 44-7.5% around central 200 parity. The foreign exchange regime was fully ISO ISO liberalized in 1999. 100 100 The koruna is fully deliverable and convertible. Spot is SO • SO liquid in both USD/CZK and EUR/CZK but EUR/CZK is 0 00 the dominant cross with around 85% of transaction volume. EUR/CZK has also taken-over from USD/CZK 4 4r 4 40 4 4 4" 4" 4" 4" 4, " 40' 41 as the most important cross in the FX forward and 11/4/01% to moo-IAD/CD( ant options market. Moto Data** Sint illoomOmy Pion IP Czech Republic joined the EU in 2004 and therefore has a commitment to join the Euro at an unspecified future USDIC7K and imphed yields 00 28 0 date. In order to enter the Eurozone, it must first meet all Maastricht criteria. .05 27 0 -30 26 U The primary objective of the Ceska Narodni Banka 3s 25 (CNB) is to maintain price stability, as defined by a -20 :4 target of 2% +/-1%. Policy decisions are made by the -25 230 seven-member Board which meets eight times per year. -30 120 On 7 November 2013 the CNB Bank Board adopted a -35 210 one-sided exchange rate commitment set at CZK 27 to -1 0 200 the euro. The commitment lasted until 6 Apr 2017 1 1 1 1 1 11 11 1 1 / e 1 1 p 11ecd when the Board decided to end the commitment at an mo use/Ca 1m Implied yekl.11o —41501C24 .rhs extraordinary monetary policy meeting. The San ()Abdo Berk discontinuation of the exchange rate commitment means that the koruna exchange rate now moves EUR/CZK implied and historical volatility according to supply and demand on the foreign 120 exchange market. 100 20 6.0 4,0 2.0 0.0 30 J0 4.0 .0.0 2010 2011 2012 2013 2011 2015 2016 2017 mmolood 3m vol len vol Soave Dane?. fla* abentep firs:ea , Page 56 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0076859 CONFIDENTIAL SDNY_GM_00223043 EFTA01379402