Slovak crown at 2-wk high vs euro, slight gains seen

    The Slovak crown hit a 
two-week high against the euro on Monday helped by improved 
regional sentiment, and moderate gains were likely ahead of the 
central bank's Tuesday liquidity-draining auction, dealers said. 
    The crown firmed as far as 34.400 per euro, its strongest 
level since Jan. 9 on Monday. It traded at 34.430  as 
of 0935 GMT, compared with 34.520 late on Friday. 
    "The crown went to 34.400 per euro as London names were 
selling euros. It gained together with the Polish zloty," said 
Tatra Banka dealer Boris Somorovsky. 
    The Slovak unit was under pressure last week, falling to a 
five-week low of 35.115 per euro, but recovered in recent days 
with renewed global appetite for emerging risk. 
    But traders said further crown gains would be rather limited 
in the coming days due to the central bank's (NBS) opposition to 
the unit's strength. 
    "Appreciation makes it likely that the central bank will 
again reject at least part of demand in its regular two-week 
repo tender tomorrow, same as on the last three occasions," 
Slovenska Sporitelna wrote in a market note. 
    The NBS has rejected part of bids in its liquidity-draining 
auction over the past three weeks to dent the crown's strength. 
It also intervened directly in the market on Dec. 28 to knock 
the crown off its record peak of 34.050 per euro. 
    The crown trades 10.4 percent above the central parity 
within the Exchange Rate Mechanism 2 (ERM-2), which Slovaks 
joined in November 2005. 
----------------- MARKET SNAPSHOT AT 0935 GMT ----------------- 
 Crown/euro  34.430 vs 34.520 on Friday (+0.22 pct) 
 Crown/dollar   26.571 vs 26.685 (+0.43) 
5-yr govt bond  yield 4.285/4.124 pct 
7-yr govt bond  yield 4.311/4.180 pct 
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[BRATISLAVA/Reuters/Finance.cz]