Slovakia has a new currency

Notwithstanding the Lisbon holdup, the European Union today confirmed the capacity of selected aspects of the project to move forward unhindered as the Commission and Council agreed on a January 2009 entry date of Slovakia to the eurozone.  The crown will convert to euros at 30.126 to 1 — which is the current rate, although the Slovak government had pushed for a higher value of the crown to get in one last monetary tightening to combat inflation before the monetary policy tools are gone.   It’s an awkward time to join as the euro could easily become the all-purpose scapegoat for rising inflation, although based on previous experience, Slovak consumers would be well-advised to watch the price conversions extremely closely.  Converting those big number crown prices to smaller number euro prices leaves scope for “rounding up” — a once-off price increase that would be coming on top of existing pressures from oil and food.   Nevertheless, Slovakia’s macroeconomic fundamentals look comfortable (especially compared to e.g. Hungary), leaving the country with an economic profile somewhat like Ireland used to have.   Nostalgia.

This entry was posted on Tuesday, July 8th, 2008 at 4:41 pm and is filed under A Fistful Of Euros, Economics: Currencies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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