Weekly Review

Central Bank intervenes against Crown
On Tuesday the National Bank of Slovakia moved against the strong crown directly on the currency market. After a massive 3% rise over the weekend pushed by a re-valuation of the mean exchange rate in the ERM II Mechanism, on Monday the Bank governor Ivan Šramko expressed his displeasure with this latest appreciation. Since the market failed to respond to this oral message, a stronger blow was then dealt
Trading began shakily on Wednesday morning, with the rate slipping steeply and unexpectedly. The Reuters Agency published a report that the NBS was secretly selling crowns to London banks, and the currency fell by one percent from 33,77 to 33,1 crowns per euro. Within an hour of the story's breaking, the intervention was definitely confirmed. "The Central Bank started to intervene through London banks, who had been offered crowns. Normally, they used to go through the domestic market," commented currency dealer Ladislav Benedek. "The NBS promised greater interest in the crown from the dealing abroad, which was proven," added dealer Boris Somorovský. The devaluation of the crown by 50 halliers is in his opinion "a good result". According to an estimate by ČSOB analyst Marek GßbriÜ, the Bank purchased a billion euros in a number of waves.
"Today's intervention was carried out according to the textbook. Experience has shown that open interventions are overall expensive and not very effective. It is better to intervene clandestinely through the London banks. Speculators saw the sale of the crown and some were afraid that international funds would raise quotas, and also started to sell. NBS played to its own strength," was the assessment of the situation given by Vladimír Pikora of the Next Finance company.
March 21

CROWN EXCHANGE RATE DEVELOPMENTS OVER THE LAST WEEK (rate in SKK/EUR)
Source: Reuters, Bloomberg

Labour Code: First compromise outlined
If Parliament passes the new Labour Code the form proposed by Minister Viera Tomanová, it will have to be updated. This was declared by Jozef Špirko of the Republic Union of Employers at Tuesday's HNClub -- the Hospodárskych novín club. The Minister in turn has suggested that the employers are practicing deceit.
Nonetheless, the first possible compromises have been spotted in the stormy debate over the new form of the labour codex. For example, employers are agreed that labour relations for a definite period may be renewed only once, even though they are publicly holding out for two renewals. The unions on the other hand are retreating from their demand for a ban on firing for foremen.
Working through temporary employment agencies is also reaching compromise in the form that workers employed in such a way would receive pay equal to that of regular employees after three months. Unions were in favour of 1,5 months while employers were demanding four. According to political scientist Miroslav Kusý, patient discussion now seems to be the recipe for overcoming mutual conflicts.
March 21

Fico off to the Vatican, then the Pope to come here
Contacts on the highest level between the Vatican and Slovakia are in the offing. The Premier Robert Fico is to visit Pope Benedict XVI, and after that the head of the Catholic Church should come to Slovakia. This is the scenario called for in the Foreign Policy Plan for 2007. "A visit by the Pope is important for our relations with the Vatican," the ministry spokesman Ján Škoda told HN. Seven out of every ten Slovaks classes himself as a Catholic.
Before a visit to Rome by Fico, which is pencilled in for the second half of the year, a request must be made by the SR Government Office -- this so far has not been done. Benedict XVI already has his scheduled visits for 2007 planned, and this country is not included in it. Slovakia however could become a stopover on a potential visit to the Czech Republic, which our western neighbours are trying to arrange for this year.
March 19