After the kuna had gained ground against the euro earlier this week, pushing the exchange rate below 7.40 kuna per euro for the first time since August 2017, the central bank (HNB) intervened on Thursday by purchasing 320.5 million euros from commercial banks to ease the appreciation pressure on the local currency.
The intervention has injected 2.37 billion kuna into the system, spent to buy euros at an average exchange rate of 7.397618 kuna for one euro. However, appreciation pressure on the kuna is likely to continue. Addiko Bank analysts said that after dividends to non-residents have been paid out, the main depreciation pressure which pushed the rate above 7.40 kuna per euro has disappeared.
They added that in the following weeks they expect kuna to gain ground to reach 7.35 kuna per euro on account of influx of foreign currency due to the tourist season, the improved current account balance, and the issue of a new euro-denominated bond worth about 750 million euros, the business daily Poslovni Dnevnik reported on Thursday.
The Croatian central bank has a policy of maintaining the kuna in a narrow fluctuation band, set between approximately 7.4 and 7.6 to the euro. This has been the second intervention by the central bank this year. The first intervention, also aimed at easing the appreciation pressure on the kuna, was done in January. In these two interventions, 5.4 billion kuna has been injected into the system, or 80 percent of the entire amount spent in 2017.