The zloty weakened to the lowest level in more than two months after Polish data showed slowdown deepened last month, increasing the probability of more interest-rate cuts to stimulate the economy.
The zloty depreciated 0.6 percent to 4.1764 per euro at 12:21 p.m. in Warsaw, its lowest level since Nov. 15. It lost 2.2 percent this year, the steepest slide after the South African rand among more then 20 emerging-market currencies tracked by Bloomberg. Yields on five-year notes fell two basis points, or 0.02 percentage points, to 3.55 percent.
Polish industrial output fell 10.6 percent from a year earlier last month, the steepest drop since April 2009, the statistics office said on Jan. 18. The central bank has cut interest rates for three consecutive months and the inflation rate projection for March may support future monetary easing, Jerzy Hausner, a policy maker, was reported as saying by PAP newswire today.
“In the absence of further macroeconomic data today, the zloty will remain under pressure as the market is trying to price in the scale of economic slowdown,” Janusz Dancewicz, chief economist at DZ Bank Polska SA in Warsaw, said in an e-mailed note. The situation in manufacturing and the labor market present “a strong argument for the continuation of an easing cycle in February and March.”
Governor Marek Belka said on Jan. 9 policy makers are close to a pause after cutting the main rate by a total of 75 basis points to 4 percent. Polish forward rate agreements signal an 80 basis-point reduction in rates over the next nine months, according to data compiled by Bloomberg.