(Adds comments from news conference, updates prices)
By Jan Korselt
PRAGUE, July 21 (Reuters) - The Czech government will
discuss the crown's "abnormal" firming but there is little it
can do about it, Prime Minister Mirek Topolanek said on Monday.
The crown's long-term ascent reflects economic growth and
will not do any harm, Topolanek told reporters.
The central European leader, who prefers a slow path toward
adoption of the euro, said the crown's rise was no reason to
rush euro zone entry, a step demanded by exporters who have seen
their margins slashed.
Topolanek said the crown's recent sharp rise was an anomaly
that the cabinet would discuss to see what could be done.
"It is necessary to analyse the abnormal development in the
recent period, and the government will undoubtedly consider it,"
Topolanek said.
But he added he saw little the government could do to stem
speculative capital moves or the long-term trend.
"The question is ... if in the long-term, the change in the
exchange rate can harm the Czech economy. I do not believe
that," Topolanek told reporters.
"The Czech crown is rising in relation to economic growth ...
It is not within the powers of any government to solve this
situation," he said.
The crown extended its gains versus the euro earlier on
Monday, hitting a new record high of 22.935 <EURCZK=>, according
to the Reuters dealing system. It slipped back to 22.98 by 1015
GMT.
The currency has gained 18.6 percent versus the euro from a
year ago on the back of strong exports and a small current
account gap, which has helped it gain status of a safe haven
amid world financial turmoil.
Other currencies in central Europe have also risen,
supported by the relative strengths of their economies and in
most cases higher interest rates than in the euro zone.
Czech economic growth has slowed from last year's peak to
5.3 percent year-on-year in the first quarter and is expected to
slacken further, in part due to the strong currency, but still
outpace the ailing western Europe.
In daily Hospodarske Noviny on Monday, Topolanek also spoke
against an intervention against the appreciating crown.
"Interventions by the (central bank) are usually expensive
and ineffective, therefore I do not recommend them," he was
quoted as saying.
He also told the paper the crown strength was no reason to
speed up euro membership.
The government has abandoned a 2010 euro adoption target
date, and has not set a new date yet, while analysts do not
expect the Czechs to switch the crown for euros until after
2012.
(Additional reporting by Jana Mlcochova, writing by Jan
Lopatka, editing by Mike Peacock)
