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Zloty Gains Second Day as Cyprus Reaches Agreement on Bailout

March 25 (Bloomberg) -- Poland’s currency strengthened for a second day after Cyprus and its creditors agreed on the terms of a bailout of the Mediterranean island, helping dodge the threat of contagion in the euro area.

The zloty advanced 0.4 percent to 4.1563 per euro by 10:47 a.m. in Warsaw, after retreating 0.7 percent last week.

Cypriot President Nicos Anastasiades agreed to shut the country’s second-largest bank Cyprus Popular Bank Pcl and impose a tax on bank deposits that spares accounts below the insured limit of 100,000 euro, paving the way for 10 billion euros ($13 billion) in emergency loans to stave off the threat of default. The euro region is the consumer of more than half of Poland’s exports.

“The rescue plan for Cyprus should support the zloty at the beginning of the week,” Bank Pekao SA economists led by Marcin Mrowiec wrote in a note.

The yield on Poland’s 10-year government bonds rose eight basis points, or 0.08 percentage point, to 3.92 percent after slumping 12 basis points on March 22.

To contact the reporter on this story: Maciej Onoszko in Warsaw at monoszko@bloomberg.net

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

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