Zloty reaches new record strengths, investors don’t mind high budget deficit

The Polish zloty yesterday appreciated to zl.3.94 to the U.S. dollar, its highest level in 20 months, but the Monetary Policy Council (RPP) firmly maintains that the National Bank of Poland (NBP) will not intervene to weaken the currency. Finance Minister Jaroslaw Bauc tried to cool investors’ heads yesterday by stating that the zloty will likely fall in the coming months and reporting that after two months the budget deficit has already reached 50% of the amount planned for the whole year. However, this only caused a slight weakening of the currency. CDM Pekao SA brokerage analyst Jacek Wisniewski cited three key reasons why the zloty keeps getting stronger. For one, investors are counting on an influx of foreign currency, when a public offering of Telekomunikacja Polska S.A. shares takes place later in the year. Investors are not expecting interest rates to be radically cut over the next three months, while Poland’s macroeconomic indicators should keep improving. The third reasons is that some investors already began accumulating zlotys, hoping to profit when German compensation to World War II slave laborers has to be converted to Polish currency. (Gazeta Wyborcza, p.20) T.J.