Zloty Hits Two-Week Low as Output Growth Slows Most in 34 Months

The zloty weakened to a two-week low after industrial output growth missed analyst forecasts, piling more pressure on the central bank to cut interest rates.

The Polish currency depreciated 0.3 percent to 4.1358 against the euro as of 2:37 p.m. in Warsaw, exceeding its decline to a third day. The yield on the government’s 10-year zloty bond was unchanged at 4.98 percent.

Industrial output increased 0.5 percent from a year earlier in August, the slowest pace since October 2009, compared with a 5.2 percent increase in July, the Central Statistics Office in Warsaw said today. That exceeded the 1.1 percent median estimate in a Bloomberg survey of 27 economists. Poland’s gross domestic product expansion hit a three-year low in the second quarter as the euro region, the country’s biggest export market, is on the brink of recession.

“Investors are reacting to weaker-than-expected data,” Maciej Reluga, chief economist Bank Zachodni WBK SA, said by phone from Warsaw. “The zloty shouldn’t weaken drastically over the near-term unless further evidence of slowing growth unnerves foreign investors, which seems unlikely.”

The weaker growth data “support expectations for monetary easing and may be negative for zloty,” Rafal Benecki, chief economist at ING Bank Slaski SA, wrote in a research note today.

Poland’s central bank will end their next interest rate meeting on Oct. 3. Policy makers have “re-evaluated” the country’s economic outlook as the euro region remains in an economic crisis, Jan Winiecki, one of 10 members of the bank’s Monetary Policy Council, said on TVN CNBC on Sept. 17.

To contact the reporter on this story: Konrad Krasuski in Warsaw at kkrasuski@bloomberg.net

To contact the editor responsible for this story: David McQuaid at dmcquaid1@bloomberg.net

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