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Revaluation of the Slovak koruna central rate in ERM II

At the request of Slovak authorities, following the agreement of the Finance ministers of the euro area Member States, President of the European Central Bank and the Finance ministers and central bank Governors of Cyprus, Denmark, Estonia, Lithuania, Latvia, Malta and Slovakia, the central rate of the Slovak koruna in ERM II has been revalued with effect from 19 March 2007.

The new central rate of the koruna against the euro was set at 1 euro = SKK 35.4424.

The lower compulsory intervention rate is SKK/EUR 30.1260 SKK/EUR and the upper rate is 40.7588 SKK/EUR.

Since its entry into ERM II in November 2005, the Slovak economy has undergone significant structural changes. Sound macroeconomic policies and a significant inflow of foreign direct investments in the recent years have led to a progressive acceleration of economic growth. The high productivity differential vis-a-vis the euro area has resulted in a substantial appreciation of the equilibrium real exchange rate. With a relatively low inflation this high differential has also been reflected in the level of nominal exchange rate. Revaluation of the central rate is therefore fully justified by equilibrium movement of economic fundamentals.

At the same time Slovakia has confirmed its commitment to continue in a sound and responsible macroeconomic policies. The appropriate policy mix, accompanied with further structural changes, is vital not only to support the new central rate, but also for a fast and sustainable growth in living standards.

Jana Kovacova
Communication Section

National Bank of Slovakia
Communications Section
Imricha Karvasa 1, 813 25 Bratislava, Slovak Republic
Tel.: +421-2-5787 2161,+421-2-5865 2161, +421-2-5787 2166, 421-2-5865 2166

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