UPDATE 1-Slovak crown hits record high of 34.72 vs euro

...economic growth and investor appetite for emerging markets assets.

The crown broke through the 34.800 level in early trade and rose as high as 34.620 to Europe's single currency , before stabilising at 34.650 by 0815 GMT, up 0.7 percent from 37.870 late on Tuesday.

The crown has been the best performing currency in central Europe this year, gaining to 8.2 percent over the year-to-date.

"Low liquidity on the market is one of reasons for the crown's sharp rally," said Slovenska Sporitelna dealer Vladimir Gajdos.

With the crown trading just 4 percent off the upper end of the currency band around its parity to the euro within the ERM-2 currency mechanism, analysts said near term comments from Slovak policy makers will prove crucial.

"We do see the cross at risk of reversal over the Christmas period, especially if policymakers hint at their Dec. 19 meeting that the significant tightening of monetary conditions which has occurred since June means they're now erring on the dovish side on (interest) rates," said Martin Blum, head of emerging markets research at Bank Austria Creditanstalt in Vienna.

Analysts said the rising crown helps the central bank tame inflation pressures, and forecast the monetary body was likely to keep the key two-week repo rate unchanged at 4.75 percent after its November 19 monthly monetary policy meeting.

[BRATISLAVA/Reuters/Finance.cz]