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UPDATE 1-Croatia cenbank buys euros from banks to counter firmer kuna
June 8, 2017 / 10:34 AM / 2 months ago

UPDATE 1-Croatia cenbank buys euros from banks to counter firmer kuna

(Adds details, dealer's comment)

ZAGREB, June 8 (Reuters) - Croatia's central bank said on Thursday it had bought 186 million euros ($209 million) from commercial banks in its second intervention on the local foreign exchange market this week to ease appreciation pressures on the kuna currency.

It bought the euros in an auction at an average rate of 7.4266 kuna per euro.

The kuna was quoted at 7.4150 at 1015 GMT, easing from a 7.3980 level before the intervention.

"At the moment we have not seen excessive appreciation pressures on the kuna, but the central bank apparently wants to send a signal as to what level it prefers at this point, possibly in the context of an expected loan for food concern Agrokor," a dealer at a major local bank said.

Two days ago the central bank stepped in and bought 188 million euros from the commercial banks.

Agrokor, a highly indebted Croatian food company currently undergoing a restructuring process, is negotiating a liquidity loan seen at around 400 million euros.

Analysts say the kuna is also vulnerable to seasonal appreciation pressures as the summer tourist season kicks off and the country is also seeing an inflow of euros in European Union development funds.

The central bank keeps the kuna in a managed float regime against the euro, occasionally intervening to counter firming or easing pressures or sudden strong rate movements.

In the last few years the kuna has been floating roughly at between 7.35 and 7.70 kuna per euro. (Reporting by Igor Ilic; Editing by Gareth Jones)

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