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Zloty Falls to Two-Week Low as Data Spur Polish Slowdown Concern

The zloty fell to the lowest in two weeks as slowing industrial output reinforced concern Poland’s economy is weakening and fueled expectations of an interest rate cut next month.

The zloty depreciated 0.3 percent to 4.1535 per euro as of 5:33 p.m. in Warsaw. It has lost 2.2 percent this week, the steepest decline among more than 20 emerging-market currencies tracked by Bloomberg. Yields on 10-year bonds slid three basis points, or 0.03 percentage point, to 4.94 percent, according to data compiled by Bloomberg.

Industrial output growth in August slid to the weakest annual pace in 34 months, the statistics office said yesterday. That prompted the central bank policy maker Andrzej Bratkowski to say in a Radio PiN interview today the country’s base rate should be “much lower” than the current 4.75 percent as the risk of a “shallow recession” has risen. The central bank will release minutes from its September meeting at 2 p.m. in Warsaw.

“Weaker industrial output data have increased expectations for an interest-rate cut in October,” Grzegorz Maliszewski, chief economist at Bank Millennium SA (MIL), wrote in an e-mailed note to clients.

Interest-rate derivatives in Poland are predicting a total of 1 percentage point in cuts a year from now, based on the difference between the three-month Warsaw Interbank Offered Rate and prices for 12-month forward rate agreement contracts compiled by Bloomberg.

To contact the reporter on this story: Piotr Skolimowski in Warsaw at

To contact the editor responsible for this story: Gavin Serkin at

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