WARSAW/PRAGUE: The Polish zloty led emerging European currencies lower on Monday, hit by concerns about a recording of Poland's central bank governor using an expletive to describe colleagues and discussing removal of a minister.
The report raised questions over the future of bank governor Marek Belka, causing investor uncertainty in central Europe's biggest economy and pushing the zloty to a nearly two-week low.
At 1456 GMT, the zloty was down 0.5 percent at 4.143 to the euro and weighing down the Hungarian forint , which bid 0.4 percent lower. The forint took in stride a court ruling that opened the way for legislation that would penalise banks less than some had feared.
Investors remained focussed on Poland, though. Warsaw's blue-chip index lost 1 percent and bond yields jumped as much as 18 basis points during the day.
The news magazine Wprost released on Saturday a recording of a conversation in a restaurant last year. In it, the magazine said, Belka told a minister he would be willing to help the government out of its economic troubles if the finance minister was fired.
He also used an expletive to describe the central bank's Monetary Policy Council, the rate-setting body he chairs.
A few months after the conversation in the restaurant, the finance minister whose removal Belka had mentioned, Jacek Rostowski, left the government in a reshuffle. Belka said on Sunday this was a coincidence.
Some politicians called on Belka - considered a safe pair of hands by investors - to resign, though he said he had done nothing outside his authority. The prosecutor general said on Monday no crime had been committed and Prime Minister Donald Tusk agreed that Belka had broken broke no law.
"There is no doubt that this could develop further in the coming days and, even though we do not necessarily think it will have a long-lasting impact on the Polish markets, it is likely that zloty volatility will remain heightened in the near term," Danske Bank said.
"Furthermore, if this eventually leads to Marek Belka being forced out as central bank governor, then, of course, the scandal could have longer lasting implications."
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