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National Bank drops interest rates

The central bank on Friday dropped three key interest rates by 1.5 per cent each, capping a week of battle against a surging Slovak crown which saw the bank spend 500 million euros to weaken the currency.

As of today, the two-week repo rate is 6.5 per cent, the one-day sterilisation rate 5 per cent and the one-day refinancing rate 6.5 per cent.

The bank expects the move to reduce an interest differential which had prompted mainly European investors to buy crowns and deposit them with the NBS. The differential, along with recent positive political and economic news coming from Slovakia, had pushed the crown to strengths not seen since 1999, and had led to fears of a worsening trade balance deficit.

The crown opened Monday trading at 41.4 to the dollar and 51.56 to the euro, its reference currency.

Compiled by Tom Nicholson from press reports.
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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