The zloty headed for the longest streak of losses in three months on concern the economy is slowing while Greece sought to win more time from European counterparts to meet economic targets.
The zloty declined 0.3 percent to 4.1066 per euro as of 12:29 p.m. in Warsaw. The currency’s 1.4 percent drop in the past six days compares with a 0.3 percent weakening for Hungarian forint and a 0.4 percent loss for the Czech koruna in the same period, according to data compiled by Bloomberg.
The Polish currency is paring this month’s rally to the strongest level in 12 months as the European debt crisis curbs exports. Greek Prime Minister Antonis Samaras is meeting German Chancellor Angela Merkel today. Germany can’t extend funding for Greece and its exit from the currency union would “not be a problem for the euro,” Volker Kauder, the parliamentary caucus leader for Merkel’s Christian Democratic Union, said today.
The recent rally in central European currencies “has been essentially fueled by enhanced optimism surrounding the eurozone crisis,” Benoit Anne, head of emerging markets strategy at Societe Generale SA in London wrote in an e-mail. The currencies are now “looking vulnerable and the zloty is the proxy for the whole region.”
The rally in the zloty will reverse in the next six months as economic slowdown may prompt Polish policy makers to seek a weaker currency to stimulate growth, Citigroup Inc. wrote in a note to clients yesterday.