WARSAW: Poland's zloty currency fell to its lowest in 15 months against the dollar on Thursday, with weak Polish retail sales data supporting the case for further rate cuts in central and eastern Europe's largest economy.
Regional currencies were stable against the euro, which was supported by data showing euro zone business growth has picked up unexpectedly this month.
The diverging expectations for monetary policy in the United States, which is expected to tighten somewhere in 2015, and further monetary easing in Poland and the euro zone have led to sharp gains for the dollar against the zloty and its regional peers.
The Polish currency has lost more than 9 percent against the greenback since the start of July, with expectations of further Polish interest rate cuts weighing on the zloty's outlook.
Hungary's forint lost about 7 percent over this period, the Czech crown 9 percent and the Romanian leu about 8 percent.
The zloty was bid at 3.34 to the dollar by 0937 GMT, up 0.2 percent on the day. Earlier on Thursday, the zloty hit a 15-month low of 3.3598.
Data published on Thursday showed nominal growth in Polish retail sales slowing to a lower than expected annual 1.6 percent in September. Adjusted for falling consumer prices, growth in sales stood at 3 percent.
"Combined with industrial production and construction output data, retail sales figures suggest real GDP growth having slowed to 2.5 percent year on year at best in the third quarter," said Michal Dybula, a Warsaw-based economist at BNP Paribas.
Poland cut interest rates by a deeper than expected 50 basis points this month and signalled there could be more cuts in quick succession as the euro zone's slump and the Ukraine crisis
constrain economic growth.
Central bank Governor Marek Belka has said that Poland may cut interest rates again, but dismissed the idea that last week's cut was the start of another significant easing cycle.
"Softer growth and negative CPI inflation support further rate cuts in Poland. We look for a 25-point reduction in November and another 25-point cut in December, or in the first quarter of 2015," BNP's Dybula said.
Polish 10-year bond yields, which are close to record lows, fell slightly after the sales data.
The yields were little changed after an auction on Thursday, at which the finance ministry sold 2016 and 2019 paper worth a total of 6.1 billion zlotys.
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