The Czech crown gained past a key level against the euro on Tuesday to touch a 23-month high as markets priced in rising chances of an interest rate increase this year.
Prague stocks also traded at their highest in nearly two years.
Other central European currencies strengthened as well, led by the Hungarian forint's 0.5% rise after stronger-than-expected inflation data showed price growth hitting a seven-year high of 4.0%.
"Investors, foreign ones especially, took the rise in inflation as a clue that the central bank may tighten monetary conditions," a dealer said, adding tightening by the Hungarian central bank, viewed as the most dovish in the region, was still unlikely.
The Hungarian central bank lowered its own inflation gauge on Tuesday and has said it was committed to an accommodative, loose monetary policy. Stock markets gave back some of their recent gains won so far this year on improving global sentiment as the United States and China moved closer to a trade deal.
Prague's market climbed to its highest since February 2018 in early Tuesday trade, at 1,141.13 points, It was up 0.2% by mid-morning. The crown retreated by 0955 GMT and was steady at 25.215 to the euro, with a dealer saying the move stronger was helped by lower liquidity and better sentiment in the region but that the 25.18 level was showing resistance.
The Czech National Bank has kept the main two-week repo rate unchanged at its last five monetary policy meetings, balancing domestic inflationary pressures with uncertainties abroad affecting the export-reliant Czech economy.
In recent months, Czech markets have priced out chances of a rate cut in the next year.
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