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Crown sets new record at 34.06 SKK/EUR

THE SLOVAK crown continued its record-breaking streak against the euro in recent weeks, hitting a new strongest-ever level of 34.06 SKK/EUR on December 28.

Commenting on the development, ČSOB bank dealer Erich Pápai ascribed the firming of the Slovak currency to persistent low liquidity on the forex market, as well as the absence of client and commercial bank demand for the euro. Low levels of trading are sufficient to make the national unit stronger.

The Slovak crown is now the leading currency across the region, causing other Central European currencies to firm as well, the analyst said. "As long as the central bank (NBS) doesn't halt this development, it looks as if we are going to see the crown go beyond Sk34 per euro this year," Pápai said.

The NBS entered the market almost immediately on December 28 after two verbal interventions earlier in the month to stop the continued firming of the Slovak crown, which it claimed did not correspond with the development of the Slovak economy.

"The reason for the move was the rapid firming of the crown against the euro because of low liquidity on the forex market," NBS spokesman Igor Barát explained.

Following the intervention, the currency weakened sharply to Sk34.41 per euro shortly before midday.

Further strengthening should continue in 2007 as Slovakia continues on its way towards adopting the single European currency in January 2009.

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