(Updates with Slovakia PM on exchange rate)
By Jan Strupczewski
BRUSSELS, June 19 (Reuters) - Slovakia will seek a strong
conversion rate of its currency into the euro, its prime
minister said on Thursday after European Union leaders gave his
country the green light the euro zone on Jan. 1, 2009.
Left-wing Robert Fico said Slovakia wanted the strongest
possible exchange rate for its crown currency into the euro,
when it would be set in July by EU finance ministers, but not
one that would harm economic growth.
"We want the strongest possible conversion rate ... that
people can pay as few crowns as possible for the euro," he told
reporters at an EU summit in Brussels.
"But too strong a conversion rate could reduce economic
growth. We would like to keep economic growth at the highest
possible level and the people to profit from it (the conversion
rate) as much as possible."
The Slovak crown rose against the euro <EURSKK=> on Fico's
remarks to 30.285 from 30.355, according to Reuters' data.
The EU's 27 leaders earlier approved as expected Slovakia's
bid to the euro zone's 16th member, despite European Central
Bank concern over the country's inflation.
"We have the euro. Definitely. This is a big success of
Slovakia, because it met all the criteria in difficult times of
food and oil price rises," Fico said.
Analysts say that a strong conversion rate will help
Slovakia fight inflation. Fico has said it will also make the
country's 5.4 million citizens richer when their salaries are
translated into euros.
The EU leaders concluded, as recommended by the executive
European Commission, that Slovakia met all euro entry criteria
on inflation, interest rates, budget deficit and currency
stability.
Slovakia will become the fourth of the bloc's new members
that have joined the EU since 2004 to adopt the euro. Much
smaller Slovenia entered the single currency zone in 2007,
followed by Cyprus and Malta this year.
Bigger EU newcomers Poland, the Czech Republic and Hungary
are expected to adopt the euro well after 2010.
LEAK ALLEGATIONS
EU finance ministers will on July 8 give the final blessing
for the ex-communist country's euro adoption by setting the
final exchange rate between the Slovak crown <SKK=><EURSKK=> and
the single currency.
Slovakia's euro entry process has been clouded by
opposition allegations this week that the government may have
leaked information that moved the currency market ahead of a
crown revaluation in May.
Slovakia strengthened the crown's central parity rate last
week in the ERM 2, an exchange rate system that is a stability
test for the euro, by 15 percent in local terms and 17.6472
percent in international terms to 30.1260 to the euro.
Slovak Finance Minister Jan Pociatek has denied the
allegations. But Fico has criticised him for meeting socially on
a yacht in Monaco one of investors who had bought crowns heavily
ahead of the revaluation.
EU finance ministers had previously brushed aside ECB
concerns about the country's ability to keep inflation low in a
sustainable way, a vague euro entry criterion.
Slovakia has pledged extra fiscal tightening should
inflation prove higher than it now expects.
(Writing by Marcin Grajewski; Editing by)
