Slovak Koruna Rises on Fico Comments

June 30 (Bloomberg) -- Slovakia's koruna rose against the euro after Prime Minister Robert Fico said he would ``welcome'' a switch to the single currency at a stronger rate than planned.

The koruna also climbed versus the dollar after Fico, speaking in a Slovak Radio interview on June 28, said he would like the koruna to be converted to a higher rate when the nation adopts the euro next year. It is currently pegged at a so-called central rate of 30.126 per euro.

``The market's natural inclination is to sell euros if it's going to be lower'' than the central rate, said Lucy Bethell, an emerging-markets currency strategist at Royal Bank of Scotland Group Plc in London, who forecasts the currency will be converted at 30 per euro. ``It makes sense if it's a round number.''

The koruna climbed 0.6 percent to 30.142 per euro at noon in Bratislava, its biggest gain since May 29. It has risen 11 percent against the euro this year, making it the best performer among the 26 emerging-market currencies tracked by Bloomberg.

Slovakia is due to adopt the euro Jan. 1. As part of the Exchange Rate Mechanism II, the regime designed to check a currency's stability before euro adoption, the koruna can move plus or minus 15 percent against the common currency from its central peg. The country has revalued the peg twice, the last time lifting it by 15 percent on May 28.

Fico reiterated on June 16 that the government wants to have as strong a conversion rate as possible, the newspaper Hospodarske Noviny said. The final decision on the conversion rate will be made on July 8.

By Yon Pulkrabek

Published by J.Babinec