The zloty declined to a two-month low against the euro on speculation Poland’s central bank will keep easing monetary policy and on concern that European Union aid for Greece may be delayed.
The zloty weakened as much as 0.3 percent to 4.1721 against the euro, the weakest since Sept. 5, and was 0.2 percent lower at 5:28 p.m. in Warsaw. It lost 0.7 percent this month, the steepest drop among more than 20 emerging-market currencies tracked by Bloomberg after the Czech koruna. Yields on 10-year government bonds rose one basis point to 4.19 percent.
“The zloty is weakened by both global and local factors, as the monetary policy easing has started,” Warsaw-based analysts at PKO Bank Polski SA, including Joanna Bachert and Aleksandra Bluj, wrote in an e-mailed research note today.
Governor Marek Belka announced an “easing cycle” after Poland’s central bank cut its main interest rate by 25 basis points to 4.5 percent on Oct. 7. Forward rate agreements, used to speculate on interest rates, signal more than 100 basis points in cuts in the next six months, data compiled by Bloomberg show.
Policy makers are poised to lower borrowing costs two more times in the coming months as inflation slows, Adam Glapinski, one of 10 members of Belka’s Monetary Policy Council, said in an interview today. Jan Winiecki, another member of rate-setting panel, told TVN CNBC that he will support one more rate cut.
Finance ministers from the 17-member euro region will meet at 5 p.m. in Brussels after Greek Prime Minister Antonis Samaras gained enough support from lawmakers in his three-party coalition to pass the 2013 budget.
The ministers intend to prevent a 5 billion-euro ($6.35 billion) Greek bill redemption on Nov. 16 from triggering an accidental default, while they’re unlikely to ratify a 31.5 billion-euro payment to Greece that has been frozen since June, a European official said Nov. 9.
“The outlook for central and eastern European currencies is though far from rosy and we recommend waiting before entering new long positions, at least until an aid deal for Greece is in the bag,” Andras Oszlay, a Budapest-based analyst for DZ Bank AG, wrote in a report to clients today.