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WARSAW, Feb 26 (Reuters) - Polish central bank governor Slawomir Skrzypek said on Thursday the bank might intervene on the currency market to support the zloty in certain conditions.
The Polish currency, together with its regional peers, has been hit hard during the current financial crisis, losing almost 12.5 percent of its value versus the euro since the beginning of the year as global risk aversion prompts investors to put their money into less risky markets.
"The uncertainty about when this instrument (FX interventions) might be used discourages (speculation)," Skrzypek told TVP Info.
When asked whether there was a possibility of using this instrument (forex intervention) to support the zloty, Skrzypek said: "In certain conditions, yes."
On Monday central bankers in the region launched a joint push to support their currencies that sank to multi-year or record-lows in the past week, saying their sharp drop did not reflect their economic fundamentals and was overdone.
However, the move gave the zloty only a short-lived fillip and the currency resumed its decline on Wednesday after the central bank's Monetary Policy Council (MPC) cut its main interest rate by 25 basis points to 4.0 percent.
The MPC said the key reason for easing monetary policy was worsening economic conditions, but said it was concerned about the zloty's weakness and was ready to act in support of the currency.
Traders and analysts say the region's central banks will need to back up their words with concrete action if they really want to arrest the depreciation trend. (Writing by Dagmara Leszkowicz; editing by Stephen Nisbet)