The Czech koruna gained ground against the euro and the US dollar during early European trading on Wednesday after the Czech National Bank unexpectedly slashed its key policy rate to a record low for December.

The central bank Board cut the two-week repo rate by 25 basis points to 1 percent, effective on 17th December. Economists expected the rate to be 1.25 percent. Also, the Lombard rate was cut to 2 percent. But, the discount rate was retained at 0.25 percent.

The koruna that slumped to a 3-1/2 month low of 18.155 against the US dollar by 3:00 am ET advanced 1.5 percent to 17.885 around 5:25 am. The pair saw choppy thereafter and is currently quoted at 17.99. The local unit closed yesterday's deals at 18.0525 versus the buck.

Against the euro, the Czech koruna has gained more than 1.15 percent to 26.045 by 5:25 am ET from its Asian session's fresh multi-week lows of 26.35. The domestic unit then shed some gains versus the euro shortly and is now trading at 26.22, compared to 26.256 hit late New York Tuesday.

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