Slovak crown touch stronger ahead of repo tender

    The Slovak crown traded 
slightly firmer against the euro on Tuesday, with the market 
awaiting the outcome of the central bank's (NBS) regular 
liquidity-draining tender. 
    At 0900 GMT the crown was quoted at 34.790 per euro 
, compared with 34.820 late on Monday. 
    The NBS has been using the two-week repo tender over the 
past two weeks to slow down the crown's rise. The bank also 
intervened directly in the market before the end of 2006 to 
knock the crown off a record high of 34.050 per euro. 
    "The central bank rejected part of the bids on two occasions 
and we think it is likely to do so again today," Slovenska 
Sporitelna wrote in a market note. 
    "While the crown has depreciated since then to more 
comfortable levels for the central bank there is still a risk of 
back move," it said. 
    The NBS drained 80 billion crowns from the money market last 
week, out of total bids of 143.2 billion. 
    The Slovak currency hit a one-month low of 34.935 per euro 
on Monday as investors curbed crown holdings. Dealers said the 
crown was likely to stay under pressure in the short run. 
    Slovak unit weakened through strong support at 34.650 per 
euro last week on speculation the NBS might start cutting 
interest rates in the near future as inflation outlook 
brightened. The bank hiked its key rate by 175 basis points to 
4.75 percent last year to curb inflationary pressures. 
----------------- MARKET SNAPSHOT AT 0900 GMT ----------------- 
 Crown/euro  34.790 vs 34.820 on Monday 
 Crown/dollar   26.848 vs 26.910 
5-yr govt bond  yield 4.350/4.150 vs 4.371/4.132 
7-yr govt bond  yield 4.300/4.190 vs 4.425/4.187 
--------------------------------------------------------------- 
  

[BRATISLAVA/Reuters/Finance.cz]