Bonds, image of security and interest rates behind strengthening zloty

The zloty was lifted to fresh three-year highs against the dollar in early Tuesday trading, as both foreign and domestic orders helped the zloty trade at zl. 3.88 against the greenback. Unless bad news concerning either EU negotiations or the budget deficit are leaked to the market, it is expected to grow even stronger, which is bad news for exporters. "Poland is seen as belonging to the group of countries with low risk, as EU membership is definite. This attracts investors searching for long-term and safe deposits," said Jacek Wisniewski, an analyst with Pekao SA. "Investors, like German pension funds, are purchasing treasury bonds, mainly those with a buy out period longer than five years, because they have higher interest than those in Western Europe." Another factor pushing the value of the zloty up is the market's expectations towards the National Bank to lower interest rates later this month, which might be encouraged by rate-cuts a few days ago in Slovakia and Hungary. (Reuters, Rzeczpospolita, pp. A1, B1) A.K.