The złoty is stable despite Poland’s credit rating downgrade, while bond prices are rising

The zloty steady after Moody’s decision, minister points to bond market

The zloty exchange rate remains stable despite Moody’s downgrade of Poland. That was how Finance and Economy Minister Andrzej Domański described the situation on Monday, noting that prices of Polish government bonds are rising.

On Friday, Moody’s cut Poland’s long-term foreign-currency rating by one notch, from A2 to A3. The issuer’s short-term rating was lowered to Prime-2 from P-1. The outlook remained stable.

At a news conference in Kraków, Domański said the country’s financial situation is stable. In his view, the agency’s decision did not affect either bond prices or the zloty’s quotes.

The minister also addressed criticism over the high deficit. He pointed to security spending, which he said costs the state 200 mld zł a year and accounts for 5 proc. He added that the government is taking steps to reduce the deficit.

At the same time, the dispute over a bill to tax windfall profits of fuel companies continues. Domański argued that such a move could help finance the next version of the “CPN” program and lower prices at fuel stations. On Friday, the Sejm again passed a law introducing this tax, and the funds are set to support the “Ceny Paliwa Niżej” relief program.