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Slovak national bank holds interest rates

THE SLOVAK national bank (NBS) will not change key interest rates, bank spokesman Igor Barat told the TASR news wire on Friday, August 26.

The decision to keep rates on hold left the two-week repo rate at 3 percent for the sixth month running. Overnight rates stayed at 4 percent for refinancing operations, and at 2 percent for market liquidity.

This year, the monetary authority has altered interest rates only once, with a cut in February in response to the rapid appreciation of the Slovak crown on currency markets.

The domestic currency has been influenced by developments in the Central-European region, with the Polish zloty particularly volatile. Political uncertainties in Slovakia, which culminated in the dismissal of former Economy Minister Pavol Rusko earlier this week, have worsened the situation slightly.

Although the NBS encouraged the crown to weaken in early March from 37.5 SKK/EUR, it was forced to defend the national currency at the end of the same month, when the crown eased to as low as 40 SKK/EUR because of direct euro purchases. The crown is now trading at 38.850 SKK/EUR.

Last year, the NBS changed interest rates four times, with 0.5 percentage point cuts in March, April, June and November in response to the rapid appreciation of the crown.

Compiled by Magdalena MacLeod from press reports
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