Bloomberg News

Zloty Declines as Bond Yields Drop Before Polish Rate Decision

September 04, 2012

The zloty slid for a second day while yields on Poland’s five-year notes dropped to a record on speculation the central bank will signal tomorrow it plans to cut interest rates.

The zloty depreciated 0.2 percent to 4.1963 per euro as of 5:15 p.m. in Warsaw, the third-steepest slide among more than 20 emerging-market currencies tracked by Bloomberg. The yield on five-year bonds fell six basis points to 4.24 percent, a record low, according to data compiled by Bloomberg.

Traders in interest rate derivatives are betting that policy makers are going to cut rates by the end of the year after leaving them unchanged tomorrow. The bank has scope to reduce borrowing costs if needed as the country’s economy slows, Governor Marek Belka told Bloomberg Television during a weekend conference of central bankers and economists in Jackson Hole, Wyoming.

The policy makers should signal a “readiness to cut in the fourth quarter,” Rafal Benecki, an economist at ING Groep NV in Warsaw, said in an e-mailed note to clients.

Benecki is among 26 of 27 economists surveyed by Bloomberg that predict the main rate will stay at 4.75 percent tomorrow. Three month forward-rate agreements are trading 47 basis points below the Warsaw Interbank Offered Rate, according to data compiled by Bloomberg.

To contact the reporter on this story: Piotr Skolimowski in Warsaw at

To contact the editor responsible for this story: Gavin Serkin at

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