Slovak crown eases, market expects rate cut

...interest rates at the monthly monetary 
policy meeting later in the session, dealers said. 
    The crown  was at 33.700 to the euro at 0715 GMT, 
compared with 33.636 late on Monday. 
    Most analysts in a Reuters poll expected the central bank to 
cut the main two-week repo rate by 25-50 basis points from the 
current 4.75 percent after crown gains in recent weeks have 
tightened monetary conditions. 
    The crown jumped by three percent one week ago to a record 
high of 32.710 per euro after its parity rate in the exchange 
rate mechanism ERM-2 was revalued by 8.5 percent. 
    The central bank has succeeded in erasing almost all the 
crown's post-revaluation gains by intervening on the market and 
leaving banks with excess crown liquidity. 
    Despite prevailing rate cut expectations, some analysts said 
the central bank would wait until it it is confident about 
meeting the inflation condition for the planned euro adoption in 
2009 before easing monetary policy. 
    "We expect rates to stay unchanged, although we admit that 
it will be a close call and that the risk of a rate cut is 
significant," CSOB Bank said in a market note. 
    Market watchers said a 25 basis point reduction should not 
have a negative impact on the crown, but reduction by half a 
percentage point would be expected to weaken the local unit. 
------------------ MARKET SNAPSHOT AT 0715 GMT ----------------- 
Crown/euro  at 33.700 vs 33.636 on Monday 
Crown/dollar   at 25.235 vs 24.180 
5-yr govt bond  yield 4.185/4.081 pct vs 4.102/3.938 
7-yr govt bond  yield 4.394/4.193 pct vs 4.230/4.084 
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