Bloomberg News

Zloty Heads for Steepest Weekly Drop Since November on Europe

May 18, 2012

The Polish zloty retreated for a second day, extending its steepest weekly loss in almost six months as Europe’s debt crisis worsened.

The zloty lost 0.3 percent to 4.3653 per euro as of 10:04 a.m. in Warsaw. It lost 2.4 percent this week for the biggest decline since the week ended Nov. 25, according to data compiled by Bloomberg.

The zloty hit a four-month low this week as Greece failed to form a coalition, prompting the government to sell euros from European Union funds on the currency market. Moody’s Investors Service lowered debt ratings on 16 Spanish banks, while Fitch Ratings cut Greece’s credit rating on concern the country may not be able to sustain euro membership.

“The situation on the market is solely the upshot of the situation in Greece and the uncertainty around its future in the euro area,” Janusz Dancewicz, chief economist at the Polish unit of DZ Bank AG, wrote in a note to clients. “The market is clearly driven by emotions.”

The Finance Ministry is “taking advantage of the weakness” of the zloty to sell foreign currency on the market and lower its “high volatility,” Deputy Finance Minister Dominik Radziwill wrote in an e-mailed comment yesterday.

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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