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Polish authorities are stepping up efforts to prop up the zloty after concerns over the economic fallout from Russia’s invasion of Ukraine pushed the currency to its weakest level in more than a decade.
The finance ministry said on Wednesday it would start exchanging most of its foreign currency inflows – mainly euros received from the European Union as part of the bloc’s grants to its poorer regions – directly in the market .
The announcement came shortly before the central bank confirmed its intervention to support the zloty for the second consecutive day. The Polish currency briefly erased its losses after falling to the weakest level against the euro since February 2009. It traded at 4.7611 per euro at 5:23 p.m. in Warsaw, down 0.2% on the daytime.
“Good coordinated action on the zloty from the Ministry of Finance and the central bank,” said Wojciech Stepien, economist at BNP Paribas Bank Polska SA.
The zloty was one of the hardest-hit currencies following Russian aggression in Ukraine, which heightened geopolitical risk in Eastern Europe and raised concerns about economic growth. It has lost 3.6% against the euro and 5.6% against the dollar since the war broke out.
The Polish central bank’s foreign exchange reserves stood at $161 billion and the government held 5.9 billion euros ($6.5 billion) in foreign currency in its accounts at the end of January, according to the latest data.
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