Slovak crown flat after intervention, upside seen

...but dealers expected more upward pressure early in 2007.

The crown traded in a narrow range of 34.440-610 per euro on Friday, dealers said, slightly stronger from 34.640 late on Thursday.

The Slovak unit, the fastest rising currency in central Europe this year, firmed to an all-time high of 34.050 per euro on Thursday. The central bank then stepped into the market with direct sales of crowns to stop the currency's climbing further.

The intervention halted the rise, but analysts did not expect it to reverse investors' view on the currency.

"For the time being, we think the appreciation trend will continue," ING Bank said in a note to clients.

"Should the central bank add much more crowns back to the market, say to the tune of 2-3 billion euros, we would re-think the trend for the next couple of months."

This week's gains pushed the crown to 11.5 percent above the crown's central parity and close to the 15 percent upper limit of the ERM-2 currency mechanism, which Slovakia joined a year ago as part of its plan to adopt the single currency in 2009.

The market now waits to see whether the central bank takes further steps to influence the exchange rate when more investors return to the market after year-end holidays.

[BRATISLAVA/Reuters/Finance.cz]