Slovak crown in sight of record highs, eyes GDP

    BRATISLAVA, Dec 6 (Reuters) - The Slovak crown firmed close 
to its record highs against the euro in calm Wednesday activity, 
but dealers expected only minor further moves before the release 
of third quarter GDP data later in the week. 
    At 1150 GMT, the crown traded at 35.480 per euro <EURSKK=>, 
compared with 35.510 late on Tuesday and near its all-time 
maximum of 35.450 seen on Nov. 30. 
    The unit showed no initial reaction to remarks by OECD chief 
economist Jean-Philippe Cotis, who told Reuters earlier on 
Wednesday that Slovakia's prospects to adopt the euro in 2009 
were fairly good. 
    He also said monetary policy should remain vigilant given 
strong economic growth, adding more tightening on the monetary 
and fiscal side may be needed to keep euro aspirations alive. 
    "He said rates should be higher and this is what the market 
is counting on. It's likely there will be a solid interest rate 
differential (versus the euro zone) next year," Tatra Banka 
trader Milan Cavojec said. 
    The central bank (NBS) has raised the key two-week rate by 
175 basis points to 4.75 percent this year to curb inflation, 
which is the key challenge for Slovakia's euro adoption plan. 
    The market awaits Thursday's release of GDP data to see what 
was behind a record 9.8 percent growth in the third quarter, 
shown in the preliminary statistics published last month. 
    "Signs of accelerating household consumption and wage growth 
might be seen as an argument for a rate hike... and thus support 
the crown," Slovenska Sporitelna senior analyst Maria Valachyova 
said in a research note. 
    Investors also watch the parliamentary debate on the 2007 
state budget draft to see if deputies endorse the government's 
plan to cut the fiscal gap to 2.9 percent of GDP, which is just 
below the euro adoption threshold of 3.0 percent. Deputies are 
expected to vote on the budget on Friday. 
----------------MARKET SNAPSHOT AT 1150 GMT------------------- 
Crown/Euro <EURSKK=> 35.480 vs 35.510 on Tuesday 
Crown/Dollar <SKK=> 26.667 vs 26.676 
5-yr govt bond <SK5YT=RR> yield unchanged at 4.351/149 pct 
8-yr govt bond <SK8YT=RR> yield 4.250/090 pct vs 4.275/115 
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 ((Reporting by Martin Dokoupil, editing by Ron Askew; Reuters 
Messaging: martin.dokoupil.reuters.com@reuters.net; +421 2 5341 
8402)) 
  Keywords: MARKETS SLOVAKIA CROWN MIDDAY