Bloomberg News

Polish State-Owned Bank BGK Said to Sell Dollars in Market

November 17, 2011

(Updates with zloty in second paragraph.)

Nov. 16 (Bloomberg) -- Poland’s state-owned Bank Gospodarstwa Krajowego sold dollars on the market today, spurring the zloty to the biggest advance in a week.

The zloty jumped as much as 0.8 percent, the steepest gain since Nov. 8, and traded 0.1 percent stronger at 4.4265 per euro as of 11:43 a.m. in Warsaw. Three traders said they bought dollars from BGK, which sometimes acts on the Finance Ministry’s behalf.

The government stepped in to defend the zloty by selling euros and dollars in September and October through BGK, according to Warsaw-based traders involved in the transactions.

The central bank also sold foreign currency on the market three times between Sept. 23 and Oct. 3 in its first market operations to support the zloty since the currency was floated in 2000, the National Bank of Poland said.

The Finance Ministry has defended the exchange rate partly because depreciation increases the zloty value of its debt, 29 percent of which is denominated in foreign currencies. Public borrowing rose to 52.8 percent of gross domestic product in 2010 and an increase above 55 percent would trigger compulsory spending cuts and tax increases under public-finance laws.

--Editors: Linda Shen, Alex Nicholson

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


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus