Gov't could put brakes on currency

The Economy Minister, Piotr Woźniak, said that if exports were seriously suffering then the government could act to rein in the złoty. However, exports are currently unharmed by the currency and should increase to six to eight percent next year, he said.

"If it appeared that exports fell drastically, then the government might take such an action. At least I would ask for it," Woźniak told reporters. "We have a situation where exporters are complaining about the strong złoty, but exports are growing at six to eight percent. So I can't see any reason to tamper with the złoty."

The złoty is closing in on its 40-month high, which it touched in October, thanks to the Finance Ministry's exchange of some proceeds from this year's foreign-bond issues. It is also supported by the economy's solid performance, which accelerated to 3.7 percent in the third quarter of this year, and expectations of EU funds and foreign investment inflows.

Woźniak said Poland should attract $10 (zł.33) billion in foreign direct investment this year, about $2 (zł.6.6) billion more than in 2004. In its budget draft for 2006, the government envisages that economic growth will pick up to 4.3 percent and the złoty should hold relatively stable at zł.3.97 to the euro and zł.3.38 to the dollar.

Economists say the strength of the złoty is not yet hurting exports, which rose 18.5 percent year-on-year in the first nine months of this year as Polish companies continue to improve productivity, successfully offsetting the strong currency effect. (Reuters)