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Slovakia joins ERM-II exchange rate mechanism

SLOVAKIA is now one step closer to adopting the common European currency. At midnight between November 25 and November 26, the country joined the Exchange Rate Mechanism 2 (ERM-II), the Hospodárske noviny daily wrote.

Slovakia's joining of the ERM II was intentionally sudden and unannounced in order that forex market players not have time to prepare speculative deals., Slovakia was originally supposed to have become a member of the ERM II in June 2006.

By this move the state began to meet another condition for adoption of the euro - to ensure the stability of the currency. Slovakia must now remain in the ERM II for at least two years, and only then can adopt the euro.

"After agreement between all the parties involved, the central exchange rate at which the crown is pegged to the euro was set at SKK 38.4550 to one euro, the market exchange rate, which had been the suggestion of Slovakia," said Finance Minister Ivan Mikloš. The minister added that the Slovak crown will be allowed to fluctuate in a band of plus or minus 15 percent around that rate.

Slovakia joined the ERM II after agreement with the countries of the euro-zone, the European Central Bank, and the seven other members of the ERM-2, which are outside the euro-zone for now.

According to the SITA news wire, Mikloš said: "Reforms and our consistency in sticking to the convergence programme enabled us to complete negotiations on Slovakia's entry extremely quickly." He explained that Slovakia's rapid entry into the ERM II would allow an earlier assessment of whether the country met the economic "convergence" criteria for adopting the euro in 2008, and would leave more time for final technical preparations for the introduction of the single European currency in Slovakia as of 2009.

Apart from Slovakia, ERM II members so far include: Estonia, Latvia, Lithuania, Slovenia, Cyprus, Malta, and Denmark.

Compiled by Martina Jurinová from press reports
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