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Slovenia Business Week no. 32/2004: D&B Not Concerned about Speculative Attack on Tolar

International rating firm Dun&Bradstreet (D&B) has said it does not expect Slovenia's currency, the tolar, to be the subject of a speculative attack during the country's stint in the waiting room for euro zone membership

According to D&B's latest risk report for the country, chances for such a speculative attack are small, and even if it were to occur, Slovenia's central bank is said to have "significant scope to defend the tolar".

In its report for August, D&B retains Slovenia's risk rating at DB2c, the highest in the Eastern European region. Moreover, the latest risk report continues to bear a growth sign, meaning that Slovenia's rating could be upgraded in the coming months.

Saying that "Slovenia's economic risk outlook is dominated this month by the country's ERM II entry", mainly because participation in this exchange rate mechanism increases the country's vulnerability to speculative capital, D&B concludes that any risks for a speculative attack are mitigated by several factors.

Among the mitigating factors is the country's limited importance for the financial markets and its moderate budget deficit, as well as the tolar's trading band, which D&B says "allows some room for manoeuvre".

All things considered, D&B says there is a 70-percent probability that Slovenia will adopt the euro in 2007, in line with its current plans.

Source: Slovene Press Agency STA

Author: Branka Murn