WARSAW: The Polish zloty fell to a three month low versus the euro on Monday, hit by an escalating conflict of the government with the constitutional court and expectations that the U.S. Federal Reserve might raise rates soon, dealers said.
Some traders were also positioning themselves for a potential sale of shares by Italy's Unicredit of its Polish unit Bank Pekao, which may weaken the zloty as state-owned insurer PZU is seen as a likely buyer, the dealer said.
"The weakening is mainly a result of the conflict around Poland's constitutional tribunal," said a Warsaw based currency-dealer, adding expectations for a rate hike in the United States were generally unfavourable for emerging market assets.
The European Commission is expected to send its criticisms to Warsaw on Monday as part of the Commission's investigation whether the Polish government is violating rule of law standards in its stand-off with the country's constitutional court.
The zloty traded at 4.388 to the euro by 0948 GMT, 0.4 percent weaker on the day.
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