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The Polish authorities are stepping up their efforts to support the zloty after concerns about the economic fallout from Russia's invasion of Ukraine sent the currency to its weakest level in more than a decade.
The Finance Ministry said on Wednesday it'll start exchanging the bulk of its foreign currency inflows -- mainly euro received from the European Union as part of the bloc's subsidies to its poorer regions -- directly on the market.
The announcement came shortly before the central bank confirmed it intervened to prop up the zloty for the second straight day. The Polish currency briefly erased its losses after slumping 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 day.
“Good, co-ordinated action on the zloty from the Finance Ministry and the central bank,” said Wojciech Stepien, an economist at BNP Paribas Bank Polska SA.
The zloty has been among currencies that were hit the most in the wake of Russia's aggression in Ukraine, which has heightened geopolitical risk in eastern Europe and sparked concerns over economic growth. It has lost 3.6% against the euro and 5.6% against the dollar since the war erupted.
Central Banks Grow Uneasy as Currencies Dive Further: Inside CEE
Polish central bank's currency reserves stood at $161 billion and the government held 5.9 billion euros ($6.5 billion) in foreign currencies on its accounts at the end of January, according to the latest data.
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