May 24 (Bloomberg) -- Poland’s zloty strengthened the most in more than two months after the Finance Ministry said it will buy the currency in the market this year.
The zloty appreciated as much as 1.2 percent, the biggest intraday gain since March 8. It traded up 0.9 percent to 4.3504 per euro by 5:04 p.m. in Warsaw, paring May losses to 4 percent.
Poland expects to sell the equivalent of 11 billion euros ($13.8 billion) of foreign currencies through the market, about the same amount it exchanged in 2011, Deputy Finance Minister Dominik Radziwill said late yesterday in Sopot, Poland. Recent zloty losses are a by-product of the euro’s weakening, he said.
Radziwill “is reminding the market that the ministry will be there in the background, so don’t sell the zloty too aggressively,” Timothy Ash, London-based chief emerging-markets strategist at Royal Bank of Scotland Group Plc, said in e-mailed comments. “This is a normal process in Poland and does not reflect a new, more aggressive policy towards intervention.”
The zloty slumped 1.5 percent in the previous two sessions, driving the 14-day relative strength index for the zloty-euro pair to 27 at yesterday’s close. Readings below 30 suggest in technical analysis an asset may gain. The RSI rose to 36 today.
The euro traded near the weakest since July 2010 against the dollar after German data showed business confidence declined in the continent’s largest economy and manufacturing shrank, stoking concern fallout from Europe’s debt crisis is spreading.
Polish government bonds gained today, lowering five-year generic yields compiled by Bloomberg by five basis points, or 0.05 percentage point, to 5.07 percent. The yield jumped 18 basis points in May.
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