Zloty Rallies as Belka Says Currency Level Isn’t Harming Exports

The zloty rebounded from a four-week low after Gazeta Wyborcza reported Polish central bank Governor Marek Belka saying the current exchange rate wasn’t hurting exports and the economy was in “good shape.”

The zloty appreciated 0.3 percent to 4.1459 per euro as of 5:09 p.m. in Warsaw, snapping four-day losing streak. The yield on two-year notes fell one basis point to 3.88 percent.

It isn’t clear if a weaker zloty would boost economic growth and while a cut in interest rates now would be a “natural” consequence of the slowdown, the economy remains in “good shape” and may recover faster than its western European counterparts, Belka said. Policy makers unexpectedly left borrowing costs unchanged for a fourth meeting on Oct. 3, signaling a rate cut next month if the economy slows further.

“The currency may come under pressure in the next two-three months as the easing cycle is set to begin,” Janusz Dancewicz, chief economist at DZ Bank Polska SA in Warsaw, wrote in an e-mailed note to clients today.

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