Zloty Gains as Surprise Polish Output Rise Curbs Rate Cut Views

The zloty rallied after Polish industrial output unexpectedly expanded in January, paring expectations for further interest-rate cuts.

The zloty led gains among emerging-market currencies as the statics office said production grew 0.3 percent from a year earlier, defying the median forecast for a three percent drop in a Bloomberg survey of 26 economists. The report comes after Governor Marek Belka said on Feb. 6 that the central bank will have to “reconsider” its easing approach after reducing interest rates four times since November.

“The data plays into expectations for economic rebound in the second half” of 2013, Grzegorz Maliszewski, chief economist at Bank Millennium SA in Warsaw, said in an e-mailed report today. “It should also support those policy makers, who are against further rate cuts.”

The zloty gained 0.3 percent to 4.1722 per euro at 2:56 p.m. in Warsaw, the steepest appreciation among the more than 20 emerging-market currencies tracked by Bloomberg. The yield on two-year notes rose one basis point, or 0.01 percentage point to 3.43 percent.

Forward-rate agreements, derivatives used to speculate on interest rates, showed traders paring their bets on the scope of easing over the next six months. The FRAs traded 32 basis points below the three-month Warsaw interbank offered rate, compared with a 36 basis-point spread yesterday, according to data compiled by Bloomberg.

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