By Martin Santa
BRATISLAVA, May 19 (Reuters) - Slovakia's major exporters
said on Monday that euro adoption in January will eliminate the
pain of a volatile exchange rate, prop up pricing transparency,
invigorate trade and simplify cross-boarder deals.
The European Commission gave Slovakia the go ahead to swap
its crowns for euros two weeks ago. Speculators have since
driven the unit to new highs against the euro in anticipation of
policymakers setting a strong final conversion rate.
The crown, which hit a new record of 31.47 per euro
<EURSKK=> on Monday, is now cutting into exporters' margins but
big businesses say the benefits will outweigh the negatives.
Slovak oil refiner Slovnaft <SNFT.BV>, a unit of Hungary's
MOL <MOLB.BU> and the country's fourth biggest exporter, said
the single currency will erase risks.
"For Slovnaft, as for other pro-export companies, the euro's
introduction will increase stability and the predictability of
development," Slovnaft CEO Oszkar Vilagi told Reuters.
Prime Minister Robert Fico has put his weight behind a
strong rate for the benefit of Slovaks, who will be the euro
zone's poorest members with just 71 percent of the European
Union average gross domestic product per capita.
He believes that the overall effect of a stronger exchange
rate will be a net advantage for the country of 5.4 million.
"If the corporate sector can handle 20 percent crown
appreciation -- profitability is increasing, employment is
rising, and unemployment is falling -- then I think (the
economy) can cope with even more crown appreciation," he said.
The crown has firmed 28.3 percent since EU entry in 2004. It
has trailed the Polish zloty and the Czech crown, up 42.4 and
29.5 percent, respectively. The region's laggard, the Hungarian
zloty, is up just 1.3 percent.
EXPORTERS UNAFRAID
Slovnaft and just seven other firms -- Kia Motors
<000270.KS>, PSA Peugeot Citroen <PEUP.PA>, Volkswagen
<VOWG.DE>, Sony <6758.T>, Samsung Electronics <005930.KS>, U.S.
Steel <X.N>, and paper producer Mondi <MNDJ.J> <MNDJ.L> -- make
up 42.5 percent of Slovakia's total export capacity.
Kia motors -- expected to produce 300,000 cars a year by
2010 -- said the euro would help it say goodbye to negative
export-import relations and exchange rate volatility and
financial channels would be come clearer.
PSA Peugeot Citroen Slovakia, expected to produce around the
same amount of cars, and other exporters, including steel maker
Zeleziarne Podbrezova, said euro adoption benefits would
outweigh any disadvantages.
"Slovak companies have demonstrated that they can cope with
a firming crown," Vladimir Sotak, Zeleziarne Podbrezova
Chairman, said after a May 12 meeting of employers and trade
unions with Fico.
"The most important news is that the euro is coming. Future
development will be much more positive than they would have been
if this move had been delayed," Sotak said.
Slovakia is now awaiting the fixing of the exchange rate for
swapping the crown for euro. The switchover level will be set in
July, and analysts say it could be between 31.0-32.0 per euro.
