The koruna holdings amassed by foreign investors during the Czech central bank’s three-year intervention regime won’t disappear any time soon and will continue to weigh on monetary policy deliberations for months to come, a board member said.

A strong domestic economy and interest rates exceeding those in the euro zone point to currency appreciation, Oldrich Dedek, a member of the policy-making board, said in an interview in Prague. But investors aiming to exit koruna positions may continue to tame gains, he said.

“We don’t yet know how much appreciation will actually occur, and we have been saying that the exchange-rate is a major risk for the forecast because the koruna is still overbought and there is the effect of the missing counterparty,” Dedek, 53, said on Monday. “I would see this as a medium-term phenomenon, rather than something that will fade away quickly.”

With inflation running steadily above the target, policy makers in Prague are weighing how and when to cool the economy further after kicking off European monetary tightening with the continent’s first rate increase this month. The bank said more hikes will come over the next two years, with the pace and timing depending on how much the koruna strengthens.

About four months after policy makers scrapped their Swiss-style limit on koruna gains, the legacy of more than three years of such unconventional regime continues to impact policy. An estimated $65 billion of foreign capital was converted into koruna before the exit. That’s prevented bigger currency swings as investors wishing to take profit - the koruna has jumped 3.4 percent against the euro since the intervention mechanism fell in April - are offsetting new inflows.

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