After the forced devaluations in Thailand and the Czech Republic this summer, analysts began to wonder which currency would next come under attack.
Poland was top of many people's lists. Stable though its economy appears, the trade and current-account deficits are both on the increase. Estimates put this year's current-account figure at under 4.5%, and next year's at a little over 5%. Since this summer's floods, however, the estimates have risen by at least one percentage point. But this is not yet near the threshold of 7% or more which international investors and speculators appear to take as a sign to attack.
But the ability of the zloty to defend itself was tested in mid-July. On July 13 the currency was trading at 1.5% above parity (against a trade-weighted basket of currencies, predominantly dollar and Deutschmark); a day later it fell to 0.5% below. But, on July 15, the currency fell a further 5% to 5.7% below parity, sparking fears that speculators were targeting it.
It very quickly became obvious, however, that there was little danger. The National Bank of Poland (NBP) holds substantial foreign currency reserves (over $18 billion).