Bloomberg News

Polish Zloty Weakens for Second Day on Greece Ratings Downgrade

June 02, 2011

June 2 (Bloomberg) -- The zloty declined for a second day as Moody’s Investors Service cut Greece’s credit rating to a level on par with Cuba.

The zloty depreciated 0.2 percent to 3.9725 per euro as of 10:41 a.m. in Warsaw. The Czech koruna weakened 0.1 percent to 24.546 against the European common currency.

Moody’s yesterday downgraded Greece to Caa1 from B1, raising the risk of default for the country to 50 percent. The move came after European officials considered asking investors to reinvest in new Greek debt when existing bonds mature. A 110 billion-euro ($158 billion) rescue in 2010 failed to prevent an investor exodus from Greece, and the country now faces a funding gap of 30 billion euros of bonds next year with its 10-year borrowing cost above 16 percent.

“Moody’s decision to cut Greece’s rating will continue to weigh negatively on the sentiment,” Bank BPH SA economists wrote in an e-mailed note to customers. “We expect the zloty to stay on weak levels until there is a breakthrough.”

--Editors: Linda Shen, Stephen Kirkland

To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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