Variations on a Theme

The zloty varied markedly last week. It appreciated at the start of the week only to fall in the following days. The $/zl. rate ranged from 3.9450 to around 4.03. The euro/zl. rate hovered around 4.41-4.46. The reason for the zloty's fluctuations against other currencies was alarming information from rating agencies that Poland's credit rating might have to be reduced due to its rapidly swelling public debt. As expected, the government has approved the guidelines of next year's budget, with a zl.45.5-billion budget deficit. Investors now expect the Ministry of Finance to come up with the guidelines of its medium-term public finance strategy. The government is also expected to offer a plan of budgetary reforms in the next three years. National Bank of Poland (NBP) President Leszek Balcerowicz said the strategy should improve the prospects for Poland's economic growth. Many investors are putting their decisions on hold, awaiting new macroeconomic data on inflation and industrial production.