Slovakia’s currency has been re-evaluated upward to reflect strong economic growth and increased foreign investment, in a move that brings the Central European state one step closer to adopting the euro.
The koruna was re-evaluated by 8.5% on 16 March 2007, raising the new exchange rate to 35.44 koruna against the euro, following a significant strengthening of the Slovak currency. The country has experienced a high growth rate of 7.9% in 2006.
The decision to adapt the rate in the Exchange Rate Mechanism II (ERM II), a “waiting room” for eurozone membership, was taken at Slovak request with the agreement of the responsible European authorities.
The ERM II, which Slovakia joined in 2005, allows the rate to fluctuate within a band of 15%. According to the International Monetary Fund (IMF), the country is “well poised to adopt the euro” and to meet its target date to join the common currency in 2009 along with Malta and Cyprus.
The re-evaluation of the central rate of the Slovak koruna “will support the authorities in maintaining macroeconomic stability”, the Commission said in a statement. The decision is hoped to address the risks of inflation, adjust wages to productivity growth and support the convergence process.