* Current zloty level satisfactory-c.bank head Belka
* Sharp zloty appreciation could pose threat
* Belka would like to see smaller deficit in 2011 (Adds quotes, detail)
WARSAW, Aug 10 (Reuters) - The level of the Polish zloty is satisfactory and if anything threatens the Polish unit, it is sharp appreciation rather than depreciation, the central bank's governor Marek Belka said on Tuesday.
Belka added that he would have hoped to see a smaller budget deficit next year, but underlined that Poland did not need very deep fiscal cuts.
"If something threatens the zloty, it is its sharp appreciation rather than depreciation," Belka told daily Puls Biznesu in an interview.
"I hope (the zloty) appreciation trend won't be too strong. The current zloty level is satisfactory."
The governor also repeated Poland's central bank may intervene in the foreign currency market if such a need emerges.
The zloty has swung back and forth in recent months. The central bank interevened to counter its rising strength in April, while there were reports in May that the finance ministry had sold euros on the market to stop its sharp fall.
It hovered around its 3-month highs early on Tuesday, and was traded at 3.98, a touch below a key level of 4.0 against the euro.
BUDGET
The governor also said he expected the government to curb next year's budget deficit more ambitiously.
"Today it is only a fall to 45 billion zlotys from 52 billion zlotys (envisaged this year)," Belka said. "I expected next year's deficit to be smaller."
Under the government's new financial plan, budget deficit is set to be trimmed gradually to 45 billion zlotys next year and to 40 billion zlotys in 2012. The key goal of the plan is to cut the general budget deficit, that includes shortfalls generated by local government's and agencies, to the EU ceiling of 3 percent in 2013.
The plan envisages a temporary increase in value-added tax (VAT) by 1 percentage points from 2011 and the governor said last week such a move is tolerable.
However, he said now he expected the government to cut spending as other countries consolidate their public finances nowadays.
"However, it doesn't have to be sharp or sudden cuts," Belka said. (Reporting by Dagmara Leszkowicz; Editing by Kim Coghill)