Slovak crown ticks up again, market eyes c.bank

...further to test the central bank's determination to prevent the currency from rising too fast.

The crown was at 33.300 per euro as of 0915 GMT, compared with 33.400 late on Tuesday.

The Slovak central bank intervened on the foreign exchange market and flooded the money market with crown liquidity on Tuesday to weaken the crown after the revaluation of its euro peg in the ERM-2 currency grid pushed it to record highs.

"There will be probably more firming pressure on the crown," said Slovenska Sporitelna trader Vladimir Gajdos.

Market watchers said the central bank was likely to continue in its fight against what it sees as an overly sharp crown firming.

"We expect the central bank to keep intervening if the (euro/crown) exchange rate moves down again," said CSOB bank analyst Marek Gabris.

The central bank's battle against crown firming followed the currency's jump by over 3 percent against the euro on Monday after the unit's parity rate in the ERM-2 exchange rate mechanism was revalued by 8.5 percent.

The crown has gained 16 percent over the past year, driven by Slovakia's booming economy. Slovak gross domestic product grew 8.3 percent in 2006 and is expected to accelerate further in 2007, helped by foreign direct investments and the country's aim to adopt the euro in 2009.

The NBS has repeatedly said the new ERM-2 central rate was close to what it considered an equilibrium rate justified by economic fundamentals, and that the crown should move near that level.