* Poland says S&P decision was mistake
* Ministers expect temporary zloty moves at the start of
* Minister says some 4.25 zloty per euro is a healthy level
* C.banker says zlotys should rebound soon
(Adds more economy minister's comments on zloty)
WARSAW, Jan 16 Poland shrugged off the impact of
a downgrade by Standard & Poor's (S&P) on Saturday, saying the
rating agency's decision was a mistake, but its ministers
admitted they expected short-term turbulence for the zloty when
markets open on Monday.
The ratings agency unexpectedly cut Poland's credit rating
on Friday over moves by the new conservative government which it
said weakened the independence of major institutions. It
cautioned the rating could fall further.
The rating cut immediately sent the zloty currency
to a 4-year low versus the euro.
Economy minister and deputy prime minister Mateusz
Morawiecki, in comments on private radio RMF, said he was
confident of the strength of the Polish economy and sure that
investors would not be deterred by S&P's decision.
"Investors will not run away from Poland. I am not worried
about the Polish zloty, as the general rule is that the faster
an economy grows against another one, the country's currency
strengthens," Morawiecki said.
In another interview on Saturday evening Morawiecki said
that the zloty should strengthen in the coming weeks.
"I think that somewhere close to 4.25 zlotys (for one euro)
- so as it was in the last months - is a healthy level, which we
will soon reach again", Morawiecki told public broadcaster TVP
Finance Minister Pawel Szalamacha echoed Morawiecki's views,
describing the S&P downgrade as "an intellectual mistake" which
he expected the agency to retreat from soon.
But they acknowledged there were likely to be fluctuations
in the zloty currency at the start of the trading week.
"We will see what the market reaction will be. I assume it
will be short-term, but zloty fluctuations are possible on
Monday and Tuesday, but then there will be a return to
fundamentals," Szalamacha told Reuters.
He said that after an initial nervous reaction he expected
investors to focus on economic data which were positive. "It's
too early to even think about a potential intervention to defend
the zloty," he said.
S&P quoted laws, passed by parliament which is dominated by
the ruling Law and Justice Party (PiS), regarding the make-up
and voting rights of the constitutional courts and the media -
both of which have raised concerns in the European Union that
democracy could be under threat in Poland.
S&P cut Warsaw's foreign currency rating to BBB+ with a
negative outlook from A- with a positive outlook, adding it
could lower the rating even further if the independence of
institutions like the central bank was further weakened.
Alluding to this, Morawiecki said: "I would like to stress
that the Polish government accepts and will accept the
independence of the central bank and, in this case, this is a
very important economic partner."
Fitch confirmed its Polish A- rating on Friday with a stable
outlook. Moody's, which rates Poland at A2 with a stable
outlook, one notch above Fitch, did not publish its ratings
review on Friday as expected.
Jerzy Osiatynski, a member of the central bank's monetary
policy committee, was quoted by state-run news agency PAP as
saying the weakening of the zloty after the ratings' cut was
short-term and unjustifed.
"Looking at the effective exchange rate indicators it is
obvious that the zloty is under-valued. Its purchasing power is
much bigger," Osiatynski said.
"When it come to the prospects of the Polish economy
competitiveness, there are no reasons for the exchange rate to
be so weak. I think this is temporary and this is a question of
weeks, if not days," he said.
(Reporting by Agnieszka Barteczko; additional reporting by
Pawel Sobczak, Anna Wlodarczak-Semczuk; Editing by Ralph