The zloty headed for its highest level in almost seven weeks on speculation the Polish central bank may signal an end to its easing cycle at a policy meeting today.
The zloty gained for a second day, strengthening by less than 0.1 percent to 4.1278 against the euro at 9:29 a.m. in Warsaw, its highest level on a closing basis since Jan. 17.
Polish rate-setters will cut rates by 25 basis points for the fifth time in as many months, according to 22 out of 38 economists surveyed by Bloomberg. A reduction to 3.5 percent will take rates to the lowest level since December 2000.
“The cut by 25 basis points that we expect should weaken the zloty slightly,” Raiffeisen Bank Polska SA economists led by Marta Petka-Zagajewska wrote in a note. “But it may be accompanied by a statement suggesting an end to cuts, which would on the other hand support the zloty. We may see increased volatility on EURPLN and fluctuations between 4.10 and 4.15.”
Yields on two-year government bonds rose 1 basis point, or 0.1 percentage point, to 3.57 percent. The rate on 10-year debt fell 1 basis point to 4.04 percent.
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