May 10, 2018 / 9:07 AM / a year ago

UPDATE 1-Croatia cenbank buys 320.5 mln EUR to stem upward pressure on kuna

(Adds details, background)

By Igor Ilic

ZAGREB, May 10 (Reuters) - The Croatian central bank said on Thursday it had bought 320.5 million euros ($380.40 million) from commercial banks to counter appreciation pressures on the national kuna currency.

It bought the euros at an average rate of 7.3976 kuna per euro. The kuna eased to 7.395 to the euro from the level of around 7.375 where it was quoted before the intervention.

This was the second intervention by the central bank this year to relieve upward pressure on the kuna. At the beginning of January the central bank bought 405.5 million euros from commercial banks.

Market participants expect the firming pressure to persist in the coming period amid an inflow of euros due to the summer tourist season and the finance ministry’s plan to borrow funds abroad to refinance a bond worth 750 million euros which matures in July.

The central bank keeps the kuna in a managed float regime, allowing it to fluctuate roughly at between 7.3 and 7.7 kuna to the euro.

Croatia has a highly euroised economy and more than two thirds of its deposits are denominated in euros.

Late last year Croatia started a process to adopt the euro, which the government expects to take up to seven years. ($1 = 0.8425 euros) (Reporting by Igor Ilic Editing by Gareth Jones)

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