(Bloomberg) -- Poland's Deputy Prime Minister said he was comfortable with a stronger currency and brushed off the zloty's biggest slump this year after a planned court overhaul sparked mass protests and an eleventh-hour veto by the President.
"We're comfortable at this level,” Mateusz Morawiecki, who's also finance minister, said in an interview with Bloomberg Television. “If it strengthened below 4 per euro it would be dangerous for exporters, but I'm generally in favor of a stronger zloty.”
The zloty has traded little changed against the euro this week after posting its sharpest drop in 2017 on Friday. Despite that decline, its rally this year is the best among emerging market peers tracked by Bloomberg after the Mexican peso and the Czech koruna. The currency was 0.1 percent stronger at 4.2596 against the euro as of 10:58 a.m. in London.
Morawiecki said he “wouldn't be surprised” if the zloty strengthened to 4.1 per euro in 12 months, based on the relative strength of the Polish economy, although the currency was unlikely to appreciate past 4 against the single European currency.
A bid by the ruling Law & Justice party to take control of Poland's courts brought thousands to the streets in the past week, pummeling the zloty and raising the prospect of unprecedented European Union sanctions. Markets rebounded on Monday after the President, Andrzej Duda, vetoed part of the contested legislation, but investors remain on their toes with the cabinet vowing to regroup and clamp down on a “caste” of judges.
Morawiecki said he sees “80 percent” of Polish society in favor of reforming the judiciary, while the zloty's 3.4 percent gain this year is a “vote of confidence” in the government and the economy.
(An earlier version of this story corrected the minister's title.)
To contact the reporters on this story: Mark Barton in London at barton1@bloomberg.net, Adrian Krajewski in Warsaw at akrajewski4@bloomberg.net.
To contact the editors responsible for this story: Alex Nicholson at anicholson6@bloomberg.net, Dana El Baltaji
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