August 11, 2015 / 3:40 PM / 4 years ago

UPDATE 1-Czech politicians urge central bank to quit weak crown policy

(Adds quotes, crown rate, bank reaction, detail on central bank appointments)

PRAGUE, Aug 11 (Reuters) - The heads of the two houses of the Czech parliament joined President Milos Zeman on Tuesday in urging the central bank to relax its policy of keeping the crown weak, news agency CTK said.

The bank has pledged to keep the crown from strengthening beyond about 27 to the euro until at least the second half of 2016. Its aim is to relieve deflationary pressures and help inflation hit the bank’s 2 percent target.

Zeman and the parliament chiefs called on the bank not to insist on the 27-to-the-euro level, CTK said. The policy has been unpopular with many Czechs, who face higher costs for imported goods and foreign holidays, but it has raised export revenues.

The policy was introduced in 2013 but the bank has needed to intervene only since mid-July. It has repeatedly been present in the market since then, traders and analysts have said. The bank refuses to comment on the frequency or size of interventions.

“We believe that the Czech National Bank should reevaluate its stance, it should not intervene further ... it damages the majority of Czech citizens,” CTK quoted Milan Stech, the head of the upper house, the Senate, as saying after meeting Zeman and lower house speaker Jan Hamacek.

The bank’s spokesman refused to comment. The bank reiterated its policy stance at the last monetary meeting on Aug. 6.

President Zeman appoints the bank’s seven-strong governing board, but the bank is independent in its policy making and has in the past ignored calls from Zeman for a change of course.

Governor Miroslav Singer finishes his second and final term next June. Zeman has said he will replace him with Jiri Rusnok, a board member since last year. Rusnok is a Zeman ally but he has backed the bank’s stance on interventions.

Board member Kamil Janacek, who has opposed interventions, will finish his first term next year.

Prime Minister Bohuslav Sobotka and Finance Minster Andrej Babis have backed the bank.

The crown traded at 27.022 to the euro at 1500 GMT, unchanged from Monday, in an area where the bank may be intervening according to its pledge to keep the crown around the 27 level. (Reporting by Robert Muller and Jan Lopatka, editing by Larry King)

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