Poland could see its currency rise if Greece leaves the euro because its economy is the most balanced in the European Union, central bank Governor Marek Belka said.
“Paradoxically, we could witness inflows of foreign capital and the zloty could strengthen,” Belka told reporters in Warsaw Tuesday, when asked about the consequences of Greece dropping out of the currency union. “Our main line of defense is the fact that our economy is balanced, and even the most balanced in Europe, according to the European Commission.”
The European Commission ended its surveillance of Poland’s budget last week after the government brought its deficit below the EU’s 3 percent limit. The bloc’s largest eastern economy is poised to accelerate beyond the government’s full-year target of 3.4 percent growth despite its longest bout of deflation on record.
The Finance Ministry has 60 billion zloty ($16.2 billion) of cash reserves, which leaves it in “a comfortable position it has never enjoyed before”, Belka said. That cushion would allow Poland to operate without selling bonds for several months, while the “unprecedented” size of the central bank’s foreign reserves would allow it to intervene in currency markets if necessary, according to Belka.
The zloty traded at 4.1675 per euro at 1:22 p.m. in Warsaw, down from 4.1617 yesterday. The currency has lost 1.4 percent this month. The yield on the zloty two-year bond fell two basis points to 1.92 percent, falling from the highest since October.
“The zloty remains stable despite recent volatility,” the central bank chief said.