Zloty overvalued - Miller, Euro-zone entry a priority - Kwasniewski

Prime Minister Leszek Miller told a news conference yesterday that the zloty was overvalued but failed to make a dent in investor optimism and weaken the buoyant currency. Riding a wave of foreign demand for Eastern European currencies in the final weeks of EU enlargement negotiations, the zloty is trading at six-month highs to the dollar and three-month highs to the euro. Asked if the government would take steps to weaken the zloty, Miller said: "The government's opinion is well known to the central bank, we think the zloty is overvalued and the exchange rate makes life difficult for exporters." But he has failed to win the necessary backing from the central bank, which has powers of co-decision on foreign exchange policy under Polish law. Recently, two cabinet ministers admitted the government was not working on any organized solution to the zloty's strength, which they say is hurting exporters and damaging the already weak economy. Poland's independent central bank has cut interest rates seven times this year to 7% and does not want to intervene against the zloty in the face of capital flows. President Aleksander Kwasniewski, also present at the news conference, said joining the single currency area was a top priority for Poland but gave no clues as to the timing of euro adoption. "We want to very seriously engage in the country's bid to join the euro zone, we are treating membership in the [single currency] system as an important element of Poland's development strategy," the president said. (Reuters)