Currency report: Złoty remains stable

It also hurt the złoty, but the currency minimized losses because of good fundamentals. The euro rose only to zł.3.89 while the dollar was quite stable at zł.2.95.

Emerging-market currencies fell sharply on Tuesday as the Chinese equity market collapsed and the yen surged to the highest levels this year versus the dollar, reducing the carry trade - the practice of borrowing cheaply in yen to fund purchases of higher-yielding overseas stock assets.

The euro rose above $1.32 because of weak US data, but then fell to $1.3170. The US economy grew at an annual rate of 2.2 percent, compared with the 3.5 percent previously estimated. New-home sales in the US fell 16.6 percent last month, the biggest drop in 13 years. However, the ISM index rose to 52.3.

The Polish central bank kept rates at a historic low 4.0 percent, as expected. It announced that inflation would be clearly lower in the short term, although a rise in interest rates might still prove necessary. Data showed Polish GDP remained strong at 6.4 percent and, according to the Ministry of Finance, Poland's economy may grow by up to seven percent y-o-y in Q1 of 2007.

Marek Węgrzanowski

X-Trade Brokers Dom Maklerski SA