Slovak crown rebounds from 1-mo lows, eyes on repo

    The Slovak crown erased early 
losses and rebounded from a nearly one-month low against the 
euro on Monday, but dealers said more weakening may come if the 
central bank (NBS) keeps the market awash with excess liquidity. 
    The crown eased 0.4 percent to 34.935 per euro in early 
trade, its softest level since Dec. 19, but recovered later on 
to trade at 34.820  as of 1530 GMT. It closed at 34.800 
on Friday. 
    "It looks that banks rather have a tendency to sell crowns, 
although these levels are attractive for crown purchases," said 
Tatra Banka trader Boris Somorovsky. 
    The crown fell through support at 34.650 per euro on Friday 
as some players speculated that the NBS might slash its key repo 
rate from 4.75 percent soon due to positive inflation data. 
    But the bank's chief Ivan Sramko said on the sidelines of a 
conference in Slovenia that Slovak interest rates have peaked 
and that the bank needs time to consider economic trends before 
making a move. The crown eased slightly on his remarks. 
    The bank tightened monetary settings by 175 basis points 
last year to curb inflationary pressures. 
    Investors now await the outcome of the NBS's Tuesday 
liquidity-draining tender. The bank used such tenders to slow 
down the crown's firming pace over the past two weeks. 
    "They (the NBS) will probably continue their policy (of 
rejecting bids) despite the crown weakening," said a dealer with 
a foreign bank in Bratislava. "We could go weaker, even over 
35.0 (per euro) if this is the case." 
    The NBS drained 80 billion crowns from the money market last 
week, out of total bids of 143.2 billion. It intervened directly 
in the market last month to curb the crown's strength. 
    The crown was central Europe's top performer last year, 
gaining 9.7 percent against the euro on Slovakia's record 
economic growth and sound mood in emerging markets. The unit is 
2.2 percent down from its record high of 34.050 seen on Dec. 28. 
----------------- MARKET SNAPSHOT AT 1530 GMT ----------------- 
 Crown/euro  34.820 vs 34.770 on Friday (-0.14 pct) 
 Crown/dollarb  26.910 vs 26.885 (-0.09 pct) 
5-yr govt bond  yield 4.371/4.132 vs 4.308/4.907 
7-yr govt bond  yield 4.425/4.187 vs 4.340/4.140 
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[BRATISLAVA/Reuters/Finance.cz]