Poland’s Zloty Still `Too Strong’ After Central Bank Action, Kotecki Says
April 17, 2010
By Agnes Lovasz and Dorota Bartyzel April 17 (Bloomberg) — The Polish zloty remains “too strong,” even after the central bank intervened in the market to help stall the currency’s appreciation, Deputy Finance Minister Ludwik Kotecki said. “At this stage of the recovery, the zloty is probably too strong and for sure further appreciation of the zloty should be avoided,” Kotecki said in an interview today in Madrid at a meeting of European Union finance ministers. “The recovery is not well grounded and risks still exist. Too strong a zloty would be negative.” He declined to speculate on what the best exchange rate would be for Poland’s economy. The central bank of Poland last week carried out its first intervention in 12 years. The currency’s gains are hurting exporters in the biggest of the EU’s eastern members by making Polish goods more expensive abroad and cutting the value of their sales in local currency. “We support the central bank in this activity,” Kotecki said. “We cross our fingers for successful interventions.” The zloty fell 0.5 percent yesterday to close at 3.8794 against the euro. The Polish economy has improved enough to lift revenue from value-added tax, which should lead to a lower deficit this year than envisaged in the budget law, Kotecki said. Based on “better-than-expected” March revenue, “the possibility is increasing,” he said. This Year “The deficit this year should be lower by some 15 billion zloty ($5.2 billion) mainly because of revenue,” Kotecki said. The government originally planned for a 50 billion-zloty shortfall. The budget balance will also be better as the economy is growing at about a 3 percent annual rate and inflation will be above 2 percent this year. The government’s assumptions when drafting the budget were for 1.2 percent growth and 1 percent inflation. “We are very positive looking into the future because macroeconomic activity is improving and now we see taxes are improving,” Kotecki said.
April 17, 2010
By Agnes Lovasz and Dorota Bartyzel April 17 (Bloomberg) — The Polish zloty remains “too strong,” even after the central bank intervened in the market to help stall the currency’s appreciation, Deputy Finance Minister Ludwik Kotecki said. “At this stage of the recovery, the zloty is probably too strong and for sure further appreciation of the zloty should be avoided,” Kotecki said in an interview today in Madrid at a meeting of European Union finance ministers. “The recovery is not well grounded and risks still exist. Too strong a zloty would be negative.” He declined to speculate on what the best exchange rate would be for Poland’s economy. The central bank of Poland last week carried out its first intervention in 12 years. The currency’s gains are hurting exporters in the biggest of the EU’s eastern members by making Polish goods more expensive abroad and cutting the value of their sales in local currency. “We support the central bank in this activity,” Kotecki said. “We cross our fingers for successful interventions.” The zloty fell 0.5 percent yesterday to close at 3.8794 against the euro. The Polish economy has improved enough to lift revenue from value-added tax, which should lead to a lower deficit this year than envisaged in the budget law, Kotecki said. Based on “better-than-expected” March revenue, “the possibility is increasing,” he said. This Year “The deficit this year should be lower by some 15 billion zloty ($5.2 billion) mainly because of revenue,” Kotecki said. The government originally planned for a 50 billion-zloty shortfall. The budget balance will also be better as the economy is growing at about a 3 percent annual rate and inflation will be above 2 percent this year. The government’s assumptions when drafting the budget were for 1.2 percent growth and 1 percent inflation. “We are very positive looking into the future because macroeconomic activity is improving and now we see taxes are improving,” Kotecki said.