Bloomberg News

Polish Central Bank Supports Zloty for Second Time in Week

September 30, 2011

(Updates with zloty rate in second paragraph.)

Sept. 30 (Bloomberg) -- Poland’s central bank sold foreign currencies on the market for a second time in a week to curb the zloty’s steepest quarterly loss in 2 1/2 years.

The zloty appreciated as much as 0.7 percent to 4.3986 per euro and traded 0.1 percent up at 4.4238 as of 4:16 p.m. in Warsaw. Narodowy Bank Polski sold “a certain amount” of foreign currencies for the zloty in the afternoon, it said in an e-mailed statement. It earlier asked commercial lenders for prices to sell euros and dollars, said three traders at Warsaw- based banks, who declined to be named because the information isn’t public.

Poland’s central bank sold foreign currencies on the market on Sept. 23, stepping in to bolster the zloty for the first time in at least a decade after it slid to an almost 27-month low versus the euro. State-owned Bank Gospodarstwa Krajowego separately sold euro and dollars to bank and bought government bonds the same day, said two traders involved in the transactions. BGK was also converting foreign currencies on the market yesterday, according to three traders.

“It appears we’ve been underestimating the scope of the change in the NBP foreign currency policy,” Mateusz Szczurek, chief economist at ING Bank Slaski SA wrote in an e-mailed note to clients. “The central bank starts to look like a more permanent feature in the zloty market.”

Stemming Selloffs

Policy makers from Turkey to Brazil are seeking to stem selloffs in their currencies sparked by speculation the global economic deceleration will curb exports from developing countries. Turkey’s central bank this week sold the biggest amount of dollars since Aug. 5 to shore up the lira after it fell to a record low.

The central bank sold 10 million euros ($13 million) to a Warsaw-based lender, a trader involved in the transactions said. A trader at another commercial lender in Warsaw said he bought a total of 20 million euros from the bank. Both spoke under condition of anonymity because they were not authorized to discuss transactions with clients.

The zloty lost 10 percent against the euro this quarter and is poised for the steepest loss since the first three months of 2009. It lost the most among more than 170 global currencies tracked by Bloomberg on concern that Europe’s debt crisis will slow economic growth.

Governor Marek Belka warned on Sept. 22 that the zloty is getting out of sync with Poland’s “healthy fundamentals,” making it harder for policy makers to control inflation, according to his comments posted on the central bank’s website.

Joint action by the central bank and BGK sent an “important signal” to investors and has stopped speculation against the zloty, Finance Minister Jacek Rostowski said in an interview on Radio RMF FM on Sept. 27.

--Editors: Ana Monteiro, Linda Shen

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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