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UPDATE 1-Polish officials say zloty weakness unjustified

Fri, Oct 10 2008, 10:19 GMT
http://www.afxnews.com

WARSAW, Oct 10 (Reuters) - Poland's central bank and the finance ministry see the zloty currency's weakness as unjustified, they said on Friday, blaming the move on market concerns about Hungary.

The zloty weakened as investors fretted that central and east European banks could soon be caught up in the financial crisis battering western lenders, but regained ground as officials talked up the currency.

Hungary's forint fell sharply late on Thursday on market concerns about the country's largest lender OTP Bank. OTP and Hungary's finance ministry said on Friday the bank was strong and had refused a government guarantee of its interbank loans [ID:nLA713381].

At 0945 GMT the zloty had slipped to trade around 3.5885 to the euro after closing at 3.482, while Hungary's forint was around 267.00 against the euro, weakening from its 258.75 close.

"The Polish economy has strong and stable fundamentals - that hasn't changed. The zloty weakening is a consequence of the situation in Hungary," Deputy Finance Minister Katarzyna Zajdel-Kurowska told Reuters.

In a statement issued after its management board held an unscheduled meeting, the Poland's central bank added the country's banking system was in good shape.

Hawkish Polish central banker Halina Wasilewska-Trenkner also told Reuters there were no economic reasons to justify a steep zloty drop.

The Polish currency has been weakening for weeks, pulled down by investors' risk aversion as the global financial crisis intensifies.

(Writing by Dagmara Leszkowicz; Editing by Ruth Pitchford) Keywords: POLAND CBANK/

tf.TFN-Europe_newsdesk@thomsonreuters.com

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