Zloty Heads for One-Week Low on Worse-Than-Expected PMI Data
Poland’s currency fell to the lowest level in more than a week against the euro after a deeper-than- expected slowdown in manufacturing spurred speculation of further interest-rate cuts.
The purchasing managers’ index dropped to 48 from 48.9 in February, HSBC Holdings Plc said in a statement on the Markit Economics website today. That’s the lowest reading since October and below the 48.7 median estimate of 23 economists surveyed by Bloomberg. A result above 50 indicates expansion, while a figure below that shows contraction.
The PMI figure “raises speculation the expected economic recovery will be delayed” and that it might be “rather frail,” Bank Pekao SA (PEO) economists led by Marcin Mrowiec wrote in a report after the data was published. “This will intensify speculation on the central bank continuing interest rate cuts.”
The zloty depreciated 0.2 percent to 4.1843 per euro, the weakest on a closing basis since March 21, as of 11:33 a.m. in Warsaw.
The March PMI reading was consistent with the central bank’s forecast, which assumes Poland’s economic growth will reach 1.3 percent this year, Andrzej Slawinski, the head of the central bank’s research institute in Warsaw, said on TVN CNBC today.
The yield on Poland’s two-year government bonds fell four basis points, or 0.04 percentage point, to 3.15 percent, dropping for the first time in four days.
The government is “receiving signals from the market” that Poland’s reputation wouldn’t suffer if its budget deficit widened to around 4 percent of gross domestic product this year, Ludwik Kotecki, the Finance Ministry’s chief economist, told Gazeta Wyborcza in an interview today.
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