Skrzypek expresses złoty worries

National Bank of Poland (NBP) President Sławomir Skrzypek is worried as to whether Polish exporters can adjust their business plans and adapt to the złoty's strength, which has the currency hovering around zł.3.40 to the euro.

"I don't think exports can adapt in such a short time," Skrzypek told reporters. "The current exchange rate increases risks to our exports."

Since taking the reins at the central bank in January 2007, Skrzypek has stressed the importance of monetary policy for fostering economic growth, rather than curbing inflation.

Before entering the EU, Poland was seen as a risky market. "Investors perceived the currency as more attractive after we entered the EU and Poland experienced a relatively high capital flow and portfolio flow into the country, which resulted in a strong currency," said Przemysław Kwiecień, an economist with X-Trade Brokers Dom Maklerski.

"It's not hard for a couple of large players to pump up the flow into the market and contribute to the significant appreciation of the złoty," he said. This flow of capital was one of the fundamental contributing factors to the growth of the złoty, he added.

But Kwiecień was not worried that investors will take their companies and move east. He stressed that central bank reports show that exporters seem to adjust to foreign exchange and fluctuating currency. Most exporters have business plans that hedge against currency fluctuations.

"Obviously, strong adjustments to exports are never welcomed by a company, therefore impacts may be felt," said Kwiecień.

But he cautioned not to make rash conclusions and said it was necessary to wait until the central bank publishes export figures for March and April. Export growth was strong in February, while the strongest złoty appreciation was noticed in March and at the beginning of April.

"It won't be until [we get the April figures] that we can judge if the negative effects of these patterns were felt," he said.