Slovak crown eases ahead of c.bank repo tender

    The Slovak crown lost 0.3 
percent against the euro on Tuesday and retreated from two-week 
highs as the market prepared for the central bank's (NBS) 
liquidity-draining repo auction, dealers said. 
    At 0920 GMT the crown traded at 34.760 per euro  
compared with the two-week peak of 34.400 in the previous 
session and Monday's close of 34.660. 
    "Foreign banks started to sell large crown volumes at the 
level of 34.560/600," said Tatra Banka dealer Boris Somorovsky. 
"They are cutting their crown exposure, probably because profits 
from the interest rate differential are close to nothing." 
    The central bank has pushed money market rates down in the 
past three weeks by rejecting some bids in its repo tenders and 
leaving the banks with excess crown liquidity. 
    The two-week deposit rate stood at 3.80/4.10 percent on 
Tuesday , close to a nine-month low of 3.40 seen on 
Jan. 17. 
    Traders expected the NBS to reject part of the bids in the 
repo tender again on Tuesday, saying the outcome might weaken 
the crown closer to a psychological level of 35.0 per euro. 
    "The market expects the central bank to reject some of bids 
in today's two-week repo tender again to prove the unwillingness 
for an extension of recent SKK rally," Lucia Steklacova, a 
senior economist at ING Bank in Bratislava, said in a note. 
    The currency trades now 9.6 percent above the central parity 
within the Exchange Rate Mechanism 2 (ERM-2), which Slovakia 
joined in November 2005. 
----------------- MARKET SNAPSHOT AT 0920 GMT ----------------- 
 Crown/euro  34.760 vs 34.660 on Monday (-0.30 pct) 
 Crown/dollar   26.779 vs 26.639 (-0.52) 
5-yr govt bond  yield 4.324/4.084 vs 4.350/4.150 pct 
7-yr govt bond  yield 4.375/4.135 vs 4.400/4.200 pct 
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[BRATISLAVA/Reuters/Finance.cz]