Poland’s Zloty Weakens to Month-Low on Cyprus Debt Concern
Poland’s zloty depreciated to a one-month low as the European Union and Cyprus struggled to find a solution to the financial crisis in the Mediterranean island.
The currency declined for the fourth straight day, dropping 0.1 percent to 4.1793 per euro at 11:06 a.m. in Warsaw, the weakest intra-day level since Feb. 21. Yields on Poland’s 10- year bonds rose for a third day, adding three basis points, or 0.03 percentage point, to 3.98 percent.
“The disarray around Cyprus pushed the zloty beyond the higher end of the 4.12-4.16 range,” ING Bank Slaski economists, led by Rafal Benecki, wrote in a note. They expect the euro to weaken further against the dollar in the case of lack of progress on Cyprus, which “may cause the euro-zloty rate to rise to 4.20,” the economists wrote.
Cyprus President Nicos Anastasiades met advisers to draft a new plan to stave off financial collapse after lawmakers rejected the euro area’s proposed levy on bank deposits. The European Central Bank said it will cut Cypriot off from emergency funds after March 25 unless the country agrees on a bailout with international creditors.
Poland is not seeing foreign investors exiting its bonds and short-term fluctuations in the zloty’s exchange rate are not a cause for concern, Deputy Finance Minister Wojciech Kowalczyk was quoted as saying by PAP newswire today.
Poland’s central bank will release today minutes from the Monetary Policy Council’s meeting in March, at which interest rates were unexpectedly cut 50 basis points to a record-low 3.25 percent. The minutes will be published at 2 p.m. local time.
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