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Zloty Drops Most in Week on Fed and Euro Industries Contraction

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Feb. 21 (Bloomberg) -- Poland’s zloty weakened the most in a week after Federal Reserve meeting minutes sparked concern the U.S. may curtail stimulus and as services and manufacturing in the euro region shrank more than forecast.

The zloty trailed only Hungarian forint among emerging-market currencies as several Fed policy makers said the central bank should be ready to vary the pace of their $85 billion in monthly debt purchases, according to minutes of a meeting released yesterday. Separately, a report showed euro-area services and manufacturing contracted at a faster pace than economists predicted in February, according to Markit Economics.

“The Fed minutes sparked fears that the quantitative easing may end sooner than expected,” Rafal Benecki, the chief economist for Poland at ING Groep NV in Warsaw, said in e-mailed report today.

The zloty lost as much as 0.6 percent, its steepest drop on an intraday basis since Feb. 14, and traded 0.5 percent lower at 4.1821 per euro at 10:10 a.m. in Warsaw. The currency is the second-worst performing among more than 20 peers tracked by Bloomberg.

Yields on Polish 10-year bonds slid 2 basis points, or 0.02 percentage point, to 4.04 percent, declining for the first time in three days.

To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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