Slovak crown steady vs euro, eyes rate decision

    The Slovak crown held steady 
against the euro on Monday, and traders expected the currency to 
float in a wider range ahead of the central bank's (NBS) 
interest rate decision on Tuesday. 
    The crown traded at 35.220 to the euro  as of 0925 
GMT, unchanged from Friday's close. It touched a seven-week low 
of 35.450 in the previous session. 
    "We expect the crown to be driven by regional mood today and 
see it moving in a wider range of 35.0-35.5 per euro," Slovenska 
Sporitelna analyst Maria Valachyova wrote in a note. 
    The NBS is expected to keep the key two-week repo rate at 
4.75 percent on Tuesday, for the fourth month in a row, as the 
crown has eased 3.3 percent from its end-2006 record high of 
34.050 per euro. 
    The bank intervened directly in the market in December to 
curb the crown's strength. The NBS has also been rejecting some 
bids in its weekly repo tenders over the past month to make the 
crown less attractive for speculators. 
    "A no change decision together with the full recovery of the 
repo facility, which we do expect, might re-induce appetite for 
the crown in the short term," Lucia Steklacova, senior economist 
at ING in Bratislava said in a note. 
    "In addition, the market will be handed the central bank's 
new forecasts on growth and inflation and that could be a 
slightly positive bullish story for both the currency and rates. 
Nevertheless, we target 'only' 35.0 per euro later this week," 
she said. 
    The NBS said last week it was now considering whether it is 
possible to ease monetary policy due to an improved inflation 
outlook, after 175 basis points worth of tightening last year. 
    Inflation is Slovakia's main challenge ahead of the euro 
adoption, planned for 2009. 
----------------- MARKET SNAPSHOT AT 0925 GMT ----------------- 
 Crown/euro  unchanged vs 35.220 on Friday 
 Crown/dollar   27.235 vs 27.330 (+0.35 pct) 
5-yr govt bond  yield 4.317/4.155 vs 4.308/4.088 pct 
7-yr govt bond  yield 4.407/4.208 vs 4.407/4.207 pct 
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[BRATISLAVA/Reuters/Finance.cz]