Zloty Strengthens to Seven-Week High, Yields Fall After Rate Cut

The zloty strengthened to a seven-week high after policy makers said further interest rate reductions were not on the agenda after they cut borrowing costs to a record low this week.

The Polish currency, which strengthened for a third straight week, gained 0.5 percent to 4.1279 against the euro at 5:29 p.m. in Warsaw, the biggest appreciation among European Union currencies tracked by Bloomberg. Yields on two-year bonds fell two basis points or 0.02 percentage point, to 3.39 percent.

For policy makers to lower borrowing costs further “we’d need economic conditions that significantly depart from those” predicted by the central bank, Governor Marek Belka said on March 6. He announced a switch to a “wait-and-see” approach after a series of five rate cuts in as many months took the reference rate to a record-low of 3.25 percent.

“Closing the topic of rate cuts will support the zloty for the next few months,” Joanna Bachert, an analyst at PKO Bank Polski SA, wrote in a note today.

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