Zloty Slides to 26-Month Low, Bonds Drop on Europe’s Debt Crisis
The zloty slid to a 26-month low against the euro and bond yields climbed on concern Europe’s debt crisis may slow Poland’s growth.
The zloty depreciated 1 percent to 4.3716 per euro as of 5:50 p.m. in Warsaw, the weakest level since July 2009. The yield on notes due April 2016 rose 10 basis points, or 0.10 percentage point, to 5.12 percent, a four-week high.
China’s Premier Wen Jiabao signaled developed nations should cut deficits and create jobs rather than relying on his country to bail out the world economy. Finance ministers from Brazil, Russia, India, China and South Africa, the so-called BRICS nations, will meet next week to discuss Europe’s debt crisis. Germany remains opposed to joint euro-area bonds as a means of fighting the debt crisis, Foreign Minister Guido Westerwelle said.
“The market remains cautious on Europe and risk in general,” said Baron Chan, foreign-currency strategist at Credit Suisse Group AG in London. “We may get a coordinated action over the weekend, which may act to stabilize the market at the current level.”
Treasury Secretary Timothy F. Geithner will urge European governments to step up their crisis-fighting efforts when he meets officials from the region in Wroclaw, Poland, on Sept. 16 and 17, a euro-area official said on condition of anonymity.
Poland is unlikely to repeat its “stellar outperformance” from 2009 because it lacks leeway to loosen fiscal policy, Citigroup Inc. economists wrote in a note dated yesterday following meetings in Warsaw. The Finance Ministry is in a “denial phase” playing down the impact of economic slowdown in the euro area on its finances, they wrote.
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