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Zloty Declines as Manufacturing Adds to Polish Slowdown Concern

The zloty declined after a report showed contraction in Polish manufacturing deepened in August more than estimated, adding to slowdown concern.

The zloty lost 0.4 percent to 4.1884 per euro as of 6:07 p.m. in Warsaw. The currency gained on Aug. 31 after a three-day drop that sent it to a five-week low. The yield on five-year notes fell 3 basis points to 4.30 percent today, according to data compiled by Bloomberg.

Manufacturing contracted for a fifth month in August as output decelerated at the fastest pace in more than three years, HSBC Holdings Plc said today. A purchasing managers’ index fell to 48.3 in August from 49.7 in July and below the 49.2 median estimate of 12 economists in a Bloomberg survey.

The PMI data “puts increasing pressure for policy response in the face of a likely deeper than expected economic slowdown in the coming quarters,” Agata Urbanska, economist for central and eastern Europe at HSBC in London, wrote in an e-mailed comment.

Poland’s central bank, the only one in the European Union to raise interest rates this year, 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.

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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