Zloty in Longest Winning Streak Since March on ECB, Bond Demand

The Polish zloty appreciated for a fifth day in its longest streak of gains in almost five months on expectations the European Central Bank will take decisive steps to stimulate the region’s economy this week.

The zloty advanced 0.3 percent to 4.1029 per euro as of 12:45 p.m. in Warsaw, the strongest intraday level since March 19. It appreciated 2.9 percent in the last five trading days for the second steepest gain among more than 20 emerging-market currencies tracked by Bloomberg. The yield on five-year notes slid six basis points to 4.41 percent.

ECB President Mario Draghi pledged last week to “do whatever it takes” to preserve the common currency, suggesting policy makers may intervene in bond markets to support ailing euro-area economies. The euro area is Poland’s biggest trading partner.

“The zloty may stay at stronger levels supported by ECB actions that will probably boost the risk appetite,” Cezary Chrapek, a currency and fixed-income analyst at Citigroup Inc.’s Polish unit, wrote in an e-mailed note to clients. The currency is also being supported “by foreign investor demand for Polish bonds,” he said.

Foreign investors increased their holdings of Polish bonds by 6.5 billion zloty ($1.9 billion) in June, the steepest monthly rise this year, to a record 174 billion zloty, Piotr Marczak, the head of the Finance Ministry’ public debt department wrote in a statement yesterday.

The government will seek to sell from 2 billion zloty to 4 billion zloty of five-year bonds tomorrow at its only debt auction in August, according to the Finance Ministry.

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