March 7 (Bloomberg) -- The yields on Polish government bonds slumped to a three-week low and the zloty was little changed after the central bank unexpectedly cut interest rates to a record low yesterday.
The yield on Poland’s two-year bonds fell six basis points, or 0.06 percentage point, to 3.41 percent at 2:46 p.m. in Warsaw, the lowest level since Feb. 18. The yield tumbled nine basis points yesterday after the central bank cut rates by 50 basis points to 3.25 percent, exceeding market expectations of a quarter-point reduction.
“Two-year bonds are still attractive around 3.3 percent,” Dmitri Barinov, who helps manage the equivalent of $2.6 billion in emerging European debt at Union Investment Privatfonds in Frankfurt, said in an e-mail reply to Bloomberg questions today. “I expect the council to cut rates to 3 percent and even below.”
The Finance Ministry sold 4.8 billion zloty of bonds at a switching auction today, including 2.34 billion zloty of floating-rate notes maturing in 2024, 1.34 billion of 10-year and 1.14 billion zloty of 16-year papers. The ministry bought back papers maturing between April and October this year.
The zloty was little changed at 4.1483 per euro, after a drop of 0.5 percent yesterday.
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