Polish Finance Chief Shrugs Off Zloty Plunge Amid Court SpatBy and
Currency fell as judicial refoms sparked protests, EU rebuke
Morawiecki says he’s ‘generally in favor of a stronger zloty’
Poland’s deputy prime minister said he’s comfortable with a stronger domestic currency and brushed off the zloty’s biggest slump this year after a planned court overhaul sparked mass protests and the threat of European Union sanctions before an eleventh-hour veto by the president.
“We’re comfortable at this level,” Mateusz Morawiecki, who’s also finance minister, said Wednesday in an interview with Bloomberg Television. “If it strengthened below 4 per euro it would be dangerous for exporters, but I’m generally in favor of a stronger zloty.”
Morawiecki said investors, who’ve been spooked by the proposed judicial reforms, can look to the strength of the economy, the biggest among the EU’s eastern members. Growth this year may reach 3.8 percent to 4 percent, he said.
The ruling Law & Justice party’s bid to take control of Poland’s courts brought tens of thousands of protesters into the streets this month, pummeling the zloty and raising the prospect of unprecedented EU penalties. While President Andrzej Duda’s partial veto on Monday calmed markets, the government has vowed to rework the legislation and try to pass it again, citing the need to vanquish communist remnants from the legal system.
Duda’s decision wasn’t enough to stop EU proceedings. The European Commission “substantiates its grave concerns on the planned reform of the judiciary in Poland in a Rule of Law Recommendation addressed to the Polish authorities,” the bloc said Wednesday in a statement.
It gave Poland a month to address the concerns, and once again threatened to invoke Article 7 -- which could include the suspension of national voting rights -- if measure are taken to dismiss or force the retirement of Supreme Court judges.
The zloty, which plunged 1.3 percent on Friday, reversed gains on Wednesday’s news and was little changed at 4.2633 against the euro at 12:30 p.m. in Warsaw. It remains the second-best performer among 24 emerging-market currencies tracked by Bloomberg, behind the Czech koruna.
Morawiecki said he sees “80 percent” of Polish society favoring the judicial reform, with this year’s advance of his nation’s currency a “vote of confidence” in the government and the economy. He said he “wouldn’t be surprised” if the zloty strengthened to 4.1 per euro in 12 months, based on the relative strength of the Polish economy, although the currency was unlikely to appreciate past 4.
(An earlier version of this story corrected the minister’s title.)