Slovak crown holds near 6-wk highs, seen stronger

    The Slovak crown moved in a 
narrow range against the euro close to its six-week highs seen 
earlier this week on Friday, and dealers saw room for slight 
gains in the short run due to a positive regional mood. 
    The crown traded at 34.295 to the euro  as of 1540 
GMT, little changed from 34.320 late on Thursday and just 0.7 
percent weaker than a record high of 34.050 booked late in 
December. It hit a six-week peak of 34.250 on Feb. 14. 
    "There is an optimism (in the market)," one Bratislava-based 
trader said. "The crown might go firmer and possibly test the 
34.200 per euro level." 
    The Slovak currency rose 1.12 percent this week on positive 
domestic news, such as faster-than-predicted 9.5 percent GDP 
growth for the fourth quarter, and improved regional sentiment. 
    The central bank (NBS) also fuelled investors appetite for 
the crown at the beginning of the week, accepting all bids in 
the repo tender on Tuesday. 
    But the bank drained no liquidity in Thursday's auction of 
its short-term bills, which dealers said signalled it was 
probably not happy with the crown's strength. 
    The NBS left the market swimming in excess funds four weeks 
in a row in January and in the first week of February to tame 
the crown's gains. The next repo tender is scheduled for Feb. 
20. 
    The currency is trading 10.8 percent above the central 
parity within the Exchange Rate Mechanism 2 (ERM 2), which the 
Slovaks joined in late November 2005 as part of their plan to 
enter the euro zone in 2009. 
------------------ MARKET SNAPSHOT AT 1540 GMT ----------------- 
Crown/euro  34.295 vs 34.320 on Thursday (+0.07 pct) 
Crown/dollar   unchanged at 26.145  
5-yr govt bond  yield 4.351/3.951 vs 4.300/137 pct 
7-yr govt bond  yield 4.403/203 vs 4.280/200 pct 
--------------------------------------------------------------- 
 

[BRATISLAVA/Reuters/Finance.cz]