Zloty Gains First Time in Five Days as Cyprus Concern Eases
The zloty strengthened for the first time in five days as concern eased that Cyprus’s bailout negotiations will reignite the debt crisis in the euro region, which consumes more than half of Poland’s exports.
The Polish currency appreciated 0.2 percent to 4.1852 per euro at 1:09 p.m. in Warsaw. The zloty is down 0.9 percent this week, still the worst performer among emerging-market peers tracked by Bloomberg.
“Entry levels for foreigners may look a tad more attractive as the euro-zloty rate took a bit of a hit due to more jittery European markets this week,” Gunter Deuber, an analyst at Raiffeisen Research, wrote in a weekly note.
Cypriot lawmakers will debate today legislation to unlock bailout funds. Marios Mavrides, a lawmaker with Cyprus President Nicos Anastasiades’s ruling Disy party, said the government must pass the bill to protect the island nation. The European Central Bank has said it will cut emergency funds for the Mediterranean island’s lenders after March 25 unless it agrees on a bailout with international creditors.
The yield on Poland’s two-year bonds fell for a second day, declining three basis points to 3.17 percent as weaker-than- expected retail sales increased the prospect of further interest-rate cuts.
Sales in February fell 0.8 percent from a year earlier, compared with a 3.1 percent gain in January, the Central Statistical Office in Warsaw said today. That compared with a median forecast for a 0.7 percent increase in a Bloomberg survey of 29 economists. The unemployment rate rose to 14.4 percent last month, the highest in six years, the office also said.
The data “may become an argument for further rate cuts in coming months” as it fits into a macroeconomic scenario that is worse than forecast in the Polish central bank’s projection, Piotr Lysienia, senior economist at Bank Pocztowy SA, wrote in a note today.
The bank’s forecasts assume Poland’s economic growth will slow to 1.3 percent this year, the weakest pace since 2001, while inflation stays near the lower end of the central bank’s tolerance range of 1.5 percent to 3.5 percent through 2015.
The Monetary Policy Council could cut rates further below a record low of 3.25 percent if economic growth undershoots expectations, central bank Governor Marek Belka said last week.
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