Zloty to Gain, Says LBBW, Most Accurate Forecaster (Update1)

Oct. 9 (Bloomberg) -- The zloty is poised to strengthen 10 percent against the euro in the next year as “robust” Polish spending drives economic growth, said Landesbank Baden- Wuerttemberg’sGernot Griebling, the world’s most-accurate currency forecaster.

Griebling, 48, and his team of five currency strategists beat 46 firms to rank as the top forecaster for the six quarters to June 30, according to data compiled by Bloomberg. The state- owned bank in Stuttgart, southern Germany, beat larger competitors by sticking to predictions including the dollar’s decline against the euro.

Poland is the only European Union economy that hasn’t slipped into recession this year, expanding an annual 1.1 percent in the second quarter. The zloty was eastern Europe’s best performer from July through September.

“We’re telling our German corporate clients doing business in Poland you should not hedge against a weak zloty, you should be prepared for a stronger zloty,” Griebling, head of bond and economic research at LBBW, said in a telephone interview yesterday. “The zloty seems to be significantly undervalued by approximately 10 percent against the euro.”

The zloty erased a decline of 0.8 percent, the biggest drop among 25 emerging-market currencies tracked by Bloomberg, to trade little changed at 4.2425 per euro as of 12:47 p.m. in Warsaw. The zloty will likely to climb to 4.0 by the end of this year and reach 3.8 per euro within 12 months, said Griebling.

Germany is Poland’s largest trading partner and accounts for 26 percent of companies’ sales abroad, according to statistics office data. The country turned to vehicle-scrapping subsidies as one way of encouraging consumers to spend. The 5 billion-euro ($7.4 billion) program ran out of money in September.

“Poland did well during the crisis,” Griebling said. “This was due to the fact that consumption was rather robust as the government increased wages. This should help offset the setback which we would expect from 2010 onwards as the cash-for- clunkers program runs out in Germany.”

To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net