The Bouncing Zloty


Artykuł pochodzi z pisma "New Warsaw Express"

The zloty hit a four-month high at the beginning of this week as investors started betting in earnest that interest rates will rise and the current political turmoil might all turn out for the best.
On Monday the zloty popped up by 5 groszy to both the euro and the dollar, ending the day at 4.60 to the euro and 3.74 to the dollar.
Poland's central bank has been growling about inflation with increasing vigour in recent months, as an accelerating economy and one-off effects of joining the EU combine to push prices up.
That has a lot of analysts expecting the bank to raise interest rates at the end of June, which would make Polish government bonds more attractive, pulling in foreign buyers and raising demand for the currency.
Traders are also beginning to suspect that even if parliament doesn't invite Prime Minister Marek Belka's acting government to stay on for a full year, the early elections that would result could end up delivering a government with a stronger mandate for economic reform.
But the nightmare scenario is still lurking in the back of at least some analysts' minds: on Tuesday the financial daily Parkiet quoted several analysts as saying public debt could well end the year above 55 percent of GDP, and may be there already.
That would force automatic budget cuts, which would smother Poland' fledgling economic recovery before it gets a chance to spread its wings - with similar results for the zloty's rise.

ANDREW POWERS

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