Kolodko continues to do his best to talk the zloty down

The zloty fell to a 31-month low versus the euro on Thursday as hedge funds cut exposure to the region's currencies after taking losses in Hungary and after another attempt by Finance Minister Grzegorz Kolodko to talk the currency down. The zloty has tumbled nearly 6% since Hungary slashed i nterest rates and intervened on the forex market last week to keep the forint from breaching the upper end of its trading band. Kolodko said in an interview in Madrid late on Wednesday that, "The gradual yet limited d epreciation of the zloty will continue in the short-term." Kolodko also reiterated his view that Poland should join the euro zone in four years at a zloty exchange rate of 4.35 to the euro. He declined to say whether the Finance Ministry was implementing a plan already announced to buy foreign exchange through the market to service hard currency debts. Unconfirmed rumours of such transactions have hit the zloty this week. "Kolodko's comments will no doubt spark a further sell-off in the zloty," said Lars Christiansen, emerging Europe economist at Danske Bank. (Reuters) A.K.