Currency report: Złoty gathers its strength

The złoty broke a key resistance at zł.3.90 against the euro and closed at zł.3.908 on Friday. It also gained against the dollar, closing at zł.3.057.

Analysts expect the currency to strengthen against the euro, with zł.3.86 a likely target in the short term. The złoty is also set to gain ground against the dollar. The US reported disappointing job creation figures and unemployment grew to 4.8 percent. The US is expected to hold on its current main interest rate of 5.25 percent at next month's meeting.

The central bank has been urging the government to back up its pledge of a strong złoty with tighter fiscal policy. In an article for Rzeczpospolita, central banker Dariusz Filar said strong economic fundamentals were behind the złoty's 20-percent rise since 2003 and added that they showed signs of further improvement. But he said that Prime Minister Kaczyński must keep a lid on public sector wage rises and spending.

"Public finances must be disciplined ... And the central bank must not be subject to political pressure, since only its independence forms a guarantee of appropriate monetary policy," Filar wrote. (Reuters)