Nov. 30 (Bloomberg) -- The Polish zloty advanced from a 29-month low as the Federal Reserve cut the cost of emergency dollar funding for European banks while state-owned Bank Gospodarstwa Krajowego sold dollars to local commercial lenders.
The zloty jumped 0.8 percent to 4.4966 per euro as of 4:51 p.m. in Warsaw after falling to the weakest since June 2009. Bonds rallied, pushing the yield on five-year notes 15 basis points lower to 5.26 percent. BGK sold dollars on the currency market, said two Warsaw-based traders, who declined to be identified because the information isn’t public.
The central banks of the U.S., the euro region, Canada, the U.K., Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements, the Federal Reserve said, and agreed to make other currencies available as needed. The interest rate has been reduced to the dollar overnight index swap rate plus 50 basis points, or half a percentage point, from 100 basis points, it said in a statement in Washington.
“It’s definitely good news,” Luis Costa, senior emerging-market strategist at Citigroup Inc, said by phone from London. “This eases a lot of strain in hard currency funding, at least in the short term, which we all knew was a problem for the last three, four months.”
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