Zloty Weakens to Five-Month Low Ahead of Polish GDP Data Release

The zloty fell to the weakest level in five months as investors expect gross domestic product data set to be published tomorrow will confirm the economy is slowing, bolstering the case for further interest rate cuts.

The zloty retreated 0.7 percent to 4.1973 per euro at 2:47 p.m. in Warsaw, the weakest since Sept. 5 and the fifth-steepest depreciation among more than 20 emerging-market currencies tracked by Bloomberg. The yield on 10-year notes rose 1 basis point, or 0.01 percentage point to 3.94 percent.

Economic growth fell to 2 percent last year from 4.3 percent in 2011, median from Bloomberg survey of 37 economists show. Poland’s Central Statistical Office will release the data tomorrow after it said on Jan. 24 that Polish December retail sales declined the most since 2005.

“Weakness in the zloty has been due to combination of regional currency weakness and growing recognition that the depth of the cyclical downturn in Poland warrants deep interest rate cuts,” Koon Chow, London-based head of emerging-market currency strategy at Barclays Plc, said in an e-mail today.

Poland’s Monetary Policy Council will meet on Feb. 6 to decide interest rates. Retail sales slumped 2.5 percent in the 12 months to December, data showed last week, confirming a weak outlook for Polish consumers, whose resilience in the face of the crisis helped boost economic growth since 2009.

“A fresh reminder of the compromised Polish consumer will come too soon for the market, which should keep sentiment on the zloty flat to bearish for this week,” Roderick Ngotho, London-based emerging-markets currency strategist at Royal Bank of Scotland Group Plc., wrote in e-mailed report.

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