The Czech Republic’s foreign exchange reserves climbed by 4.10 billion CZK month-on-month (MoM) in October 2025, reaching 169.40 billion CZK. This represents a 15.60% increase year-on-year (YoY) from 146.40 billion CZK in January 2025. The steady accumulation of reserves reflects CZ’s ongoing efforts to bolster external buffers amid evolving global uncertainties.

Drivers this month

• Strong export performance supporting reserve inflows.
• Central bank interventions to stabilize the CZK exchange rate.
• Moderate capital inflows from foreign direct investment (FDI).

Policy pulse

The Czech National Bank (CNB) continues to maintain a cautious monetary stance, balancing inflation control with exchange rate stability. The reserve build-up aligns with CNB’s strategy to mitigate external shocks and maintain confidence in the CZK amid global volatility.

Market lens

Immediate reaction: The CZK appreciated modestly against the EUR and USD following the release, reflecting market confidence in the country’s external position. Short-term yields on CZ government bonds edged lower, signaling reduced risk premia.

Foreign exchange reserves are a critical macroeconomic indicator reflecting a country’s ability to manage currency stability, external debt, and liquidity. CZ’s reserves have shown a consistent upward trajectory since early 2025, rising from 146.40 billion CZK in January to 169.40 billion CZK in October. This 15.60% increase is notable compared to the 12-month average of 156.30 billion CZK.

Monetary policy & financial conditions

The CNB’s monetary policy has been characterized by gradual interest rate adjustments, with the key policy rate hovering around 3.75%. The central bank’s reserve accumulation supports its capacity to intervene in forex markets, dampening excessive CZK volatility and anchoring inflation expectations near the 2% target.

Fiscal policy & government budget

Fiscal discipline remains a priority, with the government maintaining a moderate budget deficit of approximately 2.50% of GDP. This prudent fiscal stance complements the reserve build-up by limiting external borrowing needs and supporting sovereign creditworthiness.

External shocks & geopolitical risks

Heightened geopolitical tensions in Eastern Europe and global supply chain disruptions have increased the importance of robust reserves. CZ’s reserve growth provides a buffer against potential capital flight or trade shocks, enhancing resilience amid uncertain external conditions.

The reserve trajectory suggests CZ is actively strengthening its external liquidity position. The pace of accumulation accelerated in Q3 2025, coinciding with improved trade balances and stable capital markets.

Market lens

Immediate reaction: The CZK/USD and CZK/EUR pairs showed modest appreciation within the first hour post-release, with the CZK/USD strengthening by 0.30%. Two-year government bond yields declined by 5 basis points, reflecting improved market sentiment and reduced currency risk.

Looking ahead, CZ’s foreign exchange reserves are poised to continue their upward trend, supported by stable export growth and cautious monetary policy. However, risks remain from potential external shocks and geopolitical tensions.

Bullish scenario (30% probability)

• Continued export strength and FDI inflows push reserves beyond 180 billion CZK by year-end.
• Stable global conditions reduce volatility, allowing CNB to build reserves without aggressive interventions.

Base scenario (50% probability)

• Moderate reserve growth to approximately 172–175 billion CZK by December 2025.
• Monetary policy remains steady, with CNB balancing inflation and exchange rate goals.

Bearish scenario (20% probability)

• Geopolitical shocks or capital outflows slow reserve accumulation or cause temporary declines.
• CNB may need to deploy reserves to defend the CZK, limiting net growth.

Overall, the reserve build-up enhances CZ’s external stability and policy options. The CNB’s ability to maintain inflation near target while managing exchange rate pressures will be critical in the coming months.

The October 2025 foreign exchange reserves report for CZ highlights a robust external position, with reserves reaching 169.40 billion CZK. This marks a significant improvement over the past year and reflects effective macroeconomic management amid global uncertainties. The CNB’s strategic reserve accumulation supports currency stability and inflation targeting, while fiscal prudence complements external resilience.

Risks from geopolitical tensions and global market volatility remain, but CZ’s growing reserves provide a valuable buffer. Market reactions suggest confidence in the country’s external fundamentals. Going forward, maintaining this trajectory will require careful policy calibration and vigilance against external shocks.

In sum, CZ’s foreign exchange reserves are a key strength in 2025, underpinning macroeconomic stability and investor confidence.