Zloty Rallies as Belka Says Poland Close to Pause in Rate Cuts

The zloty rallied the most in almost two weeks after Governor Marek Belka said the central bank may pause in its easing cycle after cutting interest rates for a third month today.

The zloty jumped 0.8 percent to 4.0793 per euro as of 5:52 p.m. in Warsaw, the steepest advance since Dec. 27, and the biggest appreciation after the Indonesian rupiah among more than 20 emerging-market currencies tracked by Bloomberg. The yield on two-year notes rose 12 basis points to 3.31 percent.

Belka told reporters “a round of interest rate cuts is drawing to an end” after the central bank reduced borrowing costs by a quarter-point to 4 percent, matching expectations of all 33 economists surveyed by Bloomberg. The policy makers have stepped in to boost the economy that slowed to it weakest pace of expansion in more than three years.

“The outcome of the meeting confirms that the market was too aggressive in pricing in the scale of monetary easing,” Piotr Bujak, chief economist for Poland at Nordea Bank AB in Warsaw, said in an e-mailed comment today. “That supports our relatively upbeat forecast for the zloty to strengthen below 4 per euro” by the middle of 2013.

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