Slovak crown rangebound vs euro, c.bank in focus

    The Slovak crown hovered in a 
narrow range against the euro on Monday, tracking regional moves 
as the market looked ahead to the outcome of the central bank's 
(NBS) policy meeting on Tuesday, dealers said. 
    At 1625 GMT, the crown traded at 35.270 per euro , 
compared with Friday's local market close of 35.220 and a 
seven-week low of 35.450. 
    "The crown eased slightly along with the Czech crown and the 
Polish zloty," said VUB Bank dealer Laco Benedek. "There were 
attempts to push it toward 35.300, but some investors emerged 
there who were interested to buy crowns again." 
    Most analysts bet the NBS will leave the key interest rate 
at 4.75 percent on Tuesday, for the fourth month in a row, as 
the crown has lost 3.4 percent since hitting its record peak of 
34.050 per euro on Dec. 28. 
    "We expect the (NBS) Bank Board to keep policy rates 
unchanged on Tuesday, in line with the consensus," JPMorgan 
Chase economist Nora Szentivanyi wrote in a research note. 
    "Comments from members do not seem to indicate a rate cut in 
the very near term. Our base case remains for the first cut to 
come in the third quarter of 2007, but the risks would be for an 
earlier cut if the crown appreciates strongly again," she said. 
    The NBS said last week it was mulling whether it is possible 
to ease policy due to an improved inflation outlook, after 175 
basis points worth of hikes in 2006. Inflation is Slovakia's key 
obstacle ahead of euro adoption, planned for 2009. 
    Some dealers said the crown might firm toward 35.050 per 
euro if the NBS stays put and re-starts accepting all bids in 
its repo tender on Tuesday. The unit was expected to weaken 
toward 35.500/600 in case of a larger rate cut. 
    Traders said, however, a range of U.S. data and the U.S. 
Federal Open Market Committee's meeting this week will also be  
key factors for the crown, setting a tone for emerging risk. 
----------------- MARKET SNAPSHOT AT 1625 GMT ----------------- 
 Crown/euro  at 35.270 vs 35.220 on Friday (-0.14 pct) 
 Crown/dollar   27.234 vs 27.330 (+0.35 pct) 
5-yr govt bond  yield 4.342/4.121 vs 4.308/4.088 pct 
7-yr govt bond  yield 4.396/4.176 vs 4.407/4.207 pct 
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[BRATISLAVA/Reuters/Finance.cz]