Slovak crown hits record, upside seen open

    The Slovak crown strengthened 
above the key psychological level of 35.0 against the euro 
 on Tuesday as London-based investors continued to pour 
capital into central European assets. 
    The crown rose to an all-time high of 34.870 per euro as of 
1530 GMT, up from 35.140 late on Monday. 
    "The crown may move to 34.800 per euro now," said Tatra 
Banka dealer Boris Somorovsky. "It is a strong move and only few 
have expected it." 
    The crown has been the best performing currency in central 
Europe this year, buoyed by bullish a regional mood and record 
economic growth. The currency is up 8.5 percent since January. 
    The crown's new high is 9.4 percent above its central parity 
rate in the ERM-2 exchange rate mechanism, the precursor to the 
euro which Slovaks joined in November 2005 as part of the plan 
to adopt the single currency in 2009. 
    The crown is allowed to fluctuate by up to 15 percent on 
either side of the central parity rate and must stay in the 
range without severe tensions for Slovakia to qualify for euro 
entry. 
    Markets ignored parliamentary approval of the 2007 state 
budget on Tuesday, which was expected given the government's 
comfortable majority. 
    The Fico government's first budget sets the public sector 
deficit ceiling at 2.9 percent of GDP, below the level needed to 
adopt the euro. 
----------------MARKET SNAPSHOT AT 1540 GMT------------------- 
Crown/Euro  34.870 vs 35.140 on Monday (+0.69 pct) 
Crown/Dollar  26.292 vs 26.641 (+1.19) 
5-yr govt bond  yield unchanged at 4.350/4.150 pct 
8-yr govt bond  yield 4.225/4.065 vs 4.245/4.085 pct 
-------------------------------------------------------------- 
    ((Writing by Martin Santa, editing by Ian Jones; tel. +421 2 
5341 8402 
    email: martin.santa@reuters.com 
    RM: martin.santa.reuters.com@reuters.net)) 
  Keywords: MARKETS SLOVAKIA CROWN AFTERNOON 
    

[BRATISLAVA/Reuters/Finance.cz]