The central bank sold the koruna two days ago to halt its gains after it neared the upper level allowed by the so-called Exchange Rate Mechanism, which stabilizes currencies before joining the euro-region. The bank bought about €500 million, as it did at its last intervention on December 28, analysts at ING Bank and Bank of America estimated.
„The central bank doesn’t really have resources to intervene on regular basis,” said Dwyfor Evans, emerging markets analyst at Bank of America Corp. in London. „They may surprise the market and revalue the central parity.” Against the euro, the koruna traded at 34.03 by 4 p.m. yesterday in Bratislava, from 34.10 on March 8, when it climbed to a record 33.80, and 34.32 on March 2. The Slovak currency has been buoyed by strong growth in the economy, which expanded by an annual pace of 9.6% in the Q4 of 2006, the third-fastest in the European Union. Only Latvia and Estonia grew faster. Slovakia published the economic growth report on March 6.
In other trading, the Hungarian forint advanced to 249.57 per euro, from 250.76 yesterday. The currency added more than 1.9% against the euro over the last week. The yield gap, or spread, on the country’s 6% bond due October 2011 over the equivalent maturity German bund shrank to 346 basis points. Poland’s zloty rose to 3.87 per euro in Warsaw from 3.892 a week ago. The yield on Poland’s 5.25% bond due October 2017 fell to 5.19%, with the spread over the similar maturity German narrowing to 124 basis points. (Bloomberg)
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