WARSAW, Nov 21 (Reuters) - The European Central Bank
announced on Friday it had agreed to allow Poland's central bank
to draw up to 10 billion euros in funds to help its liquidity
boosting operations.
The ECB said it was part of an agreement concluded on Nov. 6
relating to Polish central bank (NBP) repurchase transactions,
facilities tied to boosting liquidity in the Polish interbank
market, which has been squeezed by the global credit crunch.
* The Polish zloty <EURPLN=> initially firmed slightly after
ecb announcement, then fell back by 0.3 percent to around 3.87
per euro.
COMMENTARY:
RODERICK NGOTHO, EMEA FX STRATEGIST, UBS
"The ECB facility is a positive for the money market. The
1yr basis swap shows that while euro funding in Poland has
improved, there is still more progress needed."
"Poland's money markets were also having problems around the
same time as Hungary's. But Hungary seemed to suffer more
because the market was more concerned about FX loans there."
STUART BENNETT, CURRENCY STRATEGIST, CALYON
"It's not new, it's just hammering out the terms of an
agreement."
"Confirmation of these things... certainly shore up Poland,
which has been suffering almost guilt by association because of
what has happened in Hungary. Whilst Hungary really got hammered
because of exposure to FX loans, Poland wasn't actually
unexposed (either)."
"If these things hadn't been put in place, Poland might well
have come in to the firing line. It hasn't been put up against
the wall and beaten up like Hungary."
"Policymakers have acted as swiftly as they could have by
getting access to FX money from the SNB and support from the
ECB. It's underpinning support but isn't something driving the
market."
ARKADIUSZ FILIPIAK, MONEY MEARKET DEALER, PEKAO.
"For now there is too little technical information how this
will be done."
"It also seems to come late. If banks had papers, they
already repoed them out."
PIOTR KALISZ, SENIOR ECONOMIST, CITIBANK HANDLOWY:
"This loan, from the ECB to NBP, aims at improving
liquidity. This is not a type of loan like Hungary got from the
IMF. It is worth noting that this lending facility is 'just in
case'."
BARTOSZ PAWLOWSKI, ANALYST, TORONTO DOMINION BANK
"Limited liquidity in foreign currencies across Central
European money markets has been one of the most important issues
standing behind the recent currency weakness."
"The move should support the Polish market (note that the
NBP signed a similar agreement with the Swiss National Bank last
week) and reduce the negative basis against EUR."
"Note, however, that the NBP has more than 50 billion euros
in foreign exchange reserves so the agreement with the ECB is
likely aimed at boosting confidence in the Polish market
(Hungary received 5 billion euros in a similar fashion last
month). Accordingly, the Zloty has strengthened only modestly
after the release."
