|
Poland May Sell Zloty to Stem Currency's Advance, Hausner Says
Poland may sell the zloty, the biggest advancer against both the euro and the dollar this year, in the event its appreciation hurts exports, Economy Minister Jerzy Hausner said in an interview in Warsaw.
``Zloty strength is starting to be a problem for exporters, which we need to worry about as exports generate the bulk of the economic growth,'' Hausner said. ``This situation can't be ignored, so if the exports slow, the exchange rate should be considered.''
Politicians in Eastern Europe are considering how to curb an advance in their currencies which they say threatens demand overseas for products made in the region. Poland hasn't sold the zloty, up 17.3 percent against the dollar and 11.1 percent higher compared with the euro since Dec. 31, for six years.
Hungarian Prime Minister Ferenc Gyurcsany said on Nov. 24 the forint's rally is making exports less competitive, according to state news service MTI. ``The stronger the better'' only applies to paprika, he added. The forint is up 13 percent against the dollar and 7 percent compared with the euro.
Slovakia, whose currency has strengthened 4.9 percent against the euro and 10.7 percent versus the dollar this year, sold its currency in July. The sale was the first since May 2003.
`Relatively Strong'
The zloty traded at 4.22 per euro at 7:50 a.m. in Warsaw, from 4.23 late on Nov. 26. It traded at 3.19 per dollar.
Exports account for about a third of Poland's economy, the largest of the 10 that joined the European Union in May. Gross domestic product expanded at an annual 6.1 percent pace in the second quarter after a gain of 6.9 percent in January to March, the most in seven years. Exports totaled 5.2 billion euros ($6.8 billion) in August, up 27 percent from a year ago.
``The zloty is relatively strong today and the appreciation will be a permanent trend,'' said Hausner, 55, who entered the government in 2001 and is a former economic adviser to President Aleksander Kwasniewski. ``That wouldn't be a problem if investment recovers but the rebound we expected'' has yet to materialize, he said in the Nov. 22 interview.
Slowing investment spending will force the country to miss the government's forecast of 5.7 percent to 5.8 percent economic growth this year, Hausner said at a press conference in Warsaw on Nov. 21. He trimmed his estimate for expansion to between 5.3 percent and 5.5 percent.
`Be More Careful'
Investment will increase less than 10 percent this year, below the government's 12.2 percent target, Hausner said in the interview. ``There was no investment rebound in the third quarter and there won't be one either in the fourth quarter, so we need to be more careful with predicting gross domestic product.''
``Mainly exports drive the economy at the moment,'' he said.
Poland's currency has climbed as the country's central bank lifted its benchmark interest rate for the first time in four years, enhancing a yield advantage on Polish government debt.
National Bank of Poland policy makers have increased their main rate three times since June, to 6.50 percent. The European Central Bank's benchmark rate is 2 percent.
Polish two-year government notes yield 4.46 percentage points more than German debt with the same maturity, compared with 3.55 percentage points at the start of the year, according to data compiled by Bloomberg.
Slowing Hungarian Growth
Hungary's firms may be forced to cut jobs amid higher competition from imported goods resulting from an appreciating forint, Deputy Finance Minister Tama Katona said in an interview published on Oct. 27. Exports fell 0.9 percent in the third quarter, according to government figures published on Nov. 8.
Economic growth in Hungary probably slowed for the second consecutive quarter in the three months through September, the first back-to-back drop in the growth rate in more than a year. The economy grew at an annual 3.7 percent rate, after expanding 4 percent in the second quarter, government data may show on Dec. 1, according to the median forecast in a Bloomberg survey.
Hungary's five-year government notes yield 5.3 percentage points more than German debt with the same maturity, compared with an average this year of 6 percentage points. The National Bank of Hungary on Nov. 22 cut its two-week deposit rate to 10 percent, still the highest in the European Union.
(Source: http://quote.bloomberg.com/apps/news?pid=10000006&sid=aWooWJoey52c&refer=home) |
|
