Zloty Drops to Seven-Week Low After Poland Begins Rate-Cut Cycle
The zloty weakened to a seven-week low after Poland’s central bank said yesterday it began a series of interest-rate cuts to boost sputtering economic growth.
The zloty depreciated 0.7 percent to 4.1704 against the euro at 6:47 p.m. in Warsaw, the weakest since Sept. 20. It slipped 1.5 percent in a four-day losing streak for the steepest slide among 31 major currencies tracked by Bloomberg.
Policy makers reduced the main interest rate by 25 basis points yesterday, Poland’s first since 2009, and Governor Marek Belka told reporters the central bank was embarking on an “easing cycle” with a “rather significant” chance of another cut in December. The move coincided with the European Commission yesterday cutting its 2013 growth outlook for Poland to 1.8 percent from 2.6 percent as the euro area debt crisis curbs exports and domestic demand weakens.
“The start of the easing cycle will act to weaken the zloty by the end of the year,” Janusz Dancewicz, chief economist at DZ Bank Polska SA, wrote in an e-mailed comment today.
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