Poland Central Bank ready to aid banks with liquidity

WASHINGTON: Poland's central bank is ready to supply the country's banking system with liquidity if a need arises and its intervention in the foreign exchange market will be random, Governor Marek Belka said late on Saturday.

The current storms in the European economy carry a risk of shortages of available cash, Belka told journalists at the sidelines of the International Monetary Fund/World Bank autumn meeting in Washington.

"The central bank is ready to, if it becomes necessary, to supply liquidity to Polish banks," he said.

"They should feel secure. Even if the international banking system dries up they can count on us."

Belka also said that should the current destabilisation in the country's forex market continue the central bank will carry out intermittent intervention aimed at keeping the rouble from sliding and spooking speculative investors.

On Friday, Polish authorities launched an unprecedented coordinated intervention on the forex and debt markets to rescue the zloty and bonds, which have been pummelled this week by the global flight from risk.

The move drove up the zloty more than two percent against the euro.

"We will be intervening - randomly, when we will decide that the market is destabilizing, but not defending any rate," Belka said.

Friday's move was the bank's first forex intervention since April 9, 2010, and only the second since Poland adopted its free-float system for the currency.

The zloty had tested 27-month lows against the euro in recent days amid fears of a second global recession and the debt crisis in the euro zone.

The governor also said that the government has been doing a good job on lowering budget deficit and will have no problem of reaching this year's target of 5.6 percent of gross domestic product (GDP).

"In general I think we will be nicely surprised with our fiscal results this year," Belka said. "Maybe the same will happen next year. Here, we are not that confident."