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Poland lost PLN 1 bln on FX options so far-treasury

  Poland’s government has so far lost about PLN 1 billion ($270 million) in unwise currency bets at state-owned companies, Deputy Treasury Minister Jan Bury was quoted as saying in daily Rzeczpospolita on Saturday.

“A billion zlotys is the amount for now because currency option contracts have different settlement dates,” Bury said. The treasury is currently checking 48 state-owned companies that admitted to have made unwise bets on the currency market.

Last summer the Polish currency soared to a record high against the euro and many Polish companies, state-owned and private, took out hedging contracts, effectively betting on further zloty appreciation. As the currency weakened on the back of the spreading global crisis and investors’ flight from riskier emerging markets assets, many of them found themselves with losses which some analysts said could be huge.

The emergence of the options problem and uncertainty of its scale has also been additionally making the zloty weaker. This has prompted the government to start discussing ways of limiting the negative impact of the currency options on the economy.

The financial watchdog, which gathered information from Warsaw-listed companies about their exposure to currency derivatives, said total exposure would not exceed PLN 15 billion ($3.9 billion), but said a further zloty retreat could boost the figure. (Reuters)