Feb. 26 (Bloomberg) -- The Polish currency weakened against the euro for the first time in three days as investors pulled back from Central European currencies on concern that Italy’s election will result in political deadlock.
“What happened in Italy is a risk-off, which results in a decline of the euro against the dollar, strengthening of the yen and a retreat from regional currencies,” including the zloty, the Czech Koruna and the forint, Karol Zaluski, chief foreign exchange dealer at ING Bank Slaski in Warsaw, said by phone.
The zloty weakened 0.4 percent to 4.1637 against the euro at 12:04 p.m. in Warsaw, the biggest decline among more than 20 emerging market currencies tracked by Bloomberg. The Koruna also fell 0.4 percent and the forint dropped 0.2 percent.
The yield on the Polish government’s 10-year zloty bonds fell for the first time in three days, declining as much as six basis points to 3.99 percent today, the lowest level in three weeks.
“Polish bonds followed core markets today, mainly German bonds,” said Marek Kaczor, head of fixed income and derivatives trading at PKO BP SA. “What catches the eye is that any rise in prices is immediately used to sell papers. The market opened quite optimistically today and there was a flood of offers.”
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