Slovak crown tests support, regional mood in focus

...guide the unit 
ahead of the central bank's May 29 policy meeting, traders said. 
    The crown drifted in a 33.765-33.890 per euro  
range, and was quoted at 33.850 against the euro as of 1435 GMT, 
down from 33.750 per euro late on Wednesday. 
    "There is an increased interest to buy euros," one 
Bratislava-based trader said. "I expect the crown to move within 
33.600-33.900 per euro range in the coming days." 
    Traders said some investors closed crown positions as they 
changed their view and now expect the crown to be fixed to the 
euro near or at the current central parity rate versus the 
european currency, rather than at a firmer rate, when Slovakia 
joins the euro zone in 2009. 
    Slovakia revalued the currency's central parity rate in the 
pre-euro ERM-2 mechanism by 8.5 percent to 35.4424 in March, a 
level the central bank sees as justified by economic 
fundamentals. 
    "In general, the sentiment is not good, there are dividend 
outflows too. We are in a correction phase," said Lucia 
Steklacova, senior analyst at ING Bank in Bratislava. 
    Steklacova expected the 33.900 per euro level to provide the 
next support for the unit. 
    Most analysts forecast the central bank (NBS) would hold its 
key two-week repo rate at 4.25 percent on May 29, with traders 
saying such scenario would not spark any crown reaction. 
----------------- MARKET SNAPSHOT AT 1430 GMT ----------------- 
Crown/euro  33.850 vs 33.750 on Wednesday (-0.30 pct) 
Crown/dollar  at 25.220 vs 25.033 (-0.74 pct) 
5-yr govt bond  yield 4.320/4.100 vs 4.411/4.190 
7-yr govt bond  yield 4.514/4.313 vs 4.458/4.238 
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[BRATISLAVA/Reuters/Finance.cz]