Markets still need clear signal of policy from new Finance Minister

The zloty failed to find reliable support on Monday as investors remained cautious over new Finance Minister Grzegorz Kolodko's budget stance despite his assurances of future fiscal stability. Worries that Kolodko could loosen fiscal policy spooked investors last week, shaving four percent of the zloty's value against the euro and dollar "The market is still nervous and I don't see a lot of room for strengthening in the near-term, unless we hear some clearly supportive and concrete policy statements from Kolodko," said Witold Wozniak, senior dealer at Deutsche Bank in Warsaw. In his only public appearance since taking office, he pledged to work toward stabilizing strained public finances. But dealers repeated that only details of his economic plan would placate the market. Kolodko served as a finance minister in the mid-1990s and became known as a fiscal expansionist. He is remembered for his then open brawl with the central bank and there are fears that he could inflame the already heated row between the central bank and the government. Kolodko has made it clear that he supports government officials who blame the central bank for bruising the economy and boosting unemp loyment with steep interest rates. Central bankers have so far avoided making comments on his appointment. (Reuters)