Eastern Europe unfazed by drop of dollar

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Eastern Europe unfazed by drop of dollar

By Carter Dougherty International Herald Tribune Wednesday, December 15, 2004

WARSAW The Polish zloty has risen steadily against major currencies for much of the year, but the country's hardy exporters are hanging on as the steadily modernizing economy copes with the shock.
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By the end of November, the zloty had risen 12.6 percent against the euro since the beginning of the year to 4.1847 zlotys per euro, testing the ability of Polish companies to bring back profits from the country's major trading partners.
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But its government is refusing to soften the blow, insisting that intervention to weaken the zloty is not an option.
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"So far, Polish exporters are not worse off," Finance Minister Miroslaw Gronicki said in an interview.
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Through much of Eastern Europe, countries are grappling with strong currencies, so far with muted negative effects but with some political backlash.
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Above all, the strengths of the region - steady growth with inflation under control - paint a fundamentally attractive picture for investors.
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With investors bearish on the dollar and Asian governments keeping their currencies steady against the dollar, traders have looked for other currencies to buy. Many have turned to Poland, Hungary and the Czech Republic.
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"The weaker dollar is keeping alive this very positive sentiment we see for the region's currencies," said Michal Dybula, an economist with BNP Paribas in Warsaw.
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Gronicki, who acknowledged that an appreciation of "another 5 to 10 percent" would begin to bite, nevertheless highlighted the positive side of the zloty's strength...cont'd

http://www.iht.com/articles/2004/12/14/business/zloty.html