Zloty Snaps Three-Day Rally as Spanish Yields Rise on Bad Loans
The Polish zloty weakened the most in a week as record-high Spanish bond yields reflected concern the euro zone’s debt crisis may not be contained in Greece, hurting the riskier emerging-market assets.
The zloty depreciated 0.7 percent to 4.2777 per euro as of 4:27 p.m. in Warsaw, snapping a three-day rally and recording the steepest loss among more than 20 emerging-market currencies tracked by Bloomberg.
Spain’s 10-year yields climbed to more than 7 percent for the first time since the euro’s creation today as a report today showed the nation’s bad loans increased in April. The New Democracy party won 129 seats in Greece’s election, enough to put together a majority coalition with third-placed Pasok, according to final results. Leader Antonis Samaras now begins his second bid in six weeks to build a coalition as euro-area finance chiefs pressure him to form a government that will keep bailout aid flowing. Poland relies on the euro area for 55 percent of its exports, according to the statistics office.
“There is a clear underperfomance in the zloty today,” Luis Costa, an emerging-market strategist at Citigroup Inc. wrote in an e-mailed note to clients. “The steady advance in Spanish yields continues to hamper a lot of progress in” central and east European currencies, he said.
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