Zloty exchange rate at highest level in 18 months thanks to interest rates cut

The current exchange rate of the Polish zloty has reached its highest level in 18 months, with the price of the dollar yesterday zl. 3.98 and the euro zl. 3.7. The zloty's new strength is due to the Monetary Policy Council's (RPP) cut in interest rates by one percentage point on Wednesday and to the fact that the current account deficit in January ($887 million) was only slightly higher than analysts had predicted. The lower interest rate presumably encouraged foreign investors to purchase Polish currency, since the interest rate of Polish bonds is still very attractive. Moreover, foreign investors expect further cuts in the basic interest rates and are willing to invest in Poland, looking forward to profits from sales of the securities purchased. "It may be a good sign from our economy, which is doing much better than we had thought," commented RPP's Grzegorz Wojtowicz. "As a result of the data from January, I have become more optimistic and I don't deny that the economic growth rate for the first quarter of this year could reach 2.5% to 3% of GDP." (Gazeta Wyborcza, pp.1,24) M. S.-C.