Prime Minister reassures jumpy markets over zloty devaluation rumors

Prime Minister Leszek Miller yesterday played down fears that his left-wing cabinet was working on a plan to devalue the zloty. Financial markets have been volatile since the resignation last week of respected finance minister Marek Belka, especially after learning that his replacement, Grzegorz Kolodko, had called earlier this year for devaluation. Kolodko, whose ideas also include implementing a currency board and expansive fiscal policy, has not detailed any plans since taking over although he has promised he would work toward stabilizing public finances. Asked if the government was working on a zloty devaluation plan, Miller told reporters: "The value of the zloty has decreased somewhat without the intervention of the government," but declined to say whether the recent weakening was satisfactory for the cabinet, which failed to force the central bank to act against the currency or change the two-year old free float regime during talks last month. Since Belka quit, the zloty has weakened four percent against the dollar and the euro, closing yesterday at 4.1858 to the former, and 4.1282 to the latter. Last Saturday Miller said the government had not discussed devaluation "so far", adding that the views of the entire cabinet, not only Kolodko, would be taken into account. (Reuters)