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Zloty economics: Crisis? What crisis?

Poland didn't just weather the global economic meltdown — it became a safe haven for investors.

The odds are that Waliszewski’s mood will continue to darken this year, as Poland becomes one of Europe’s investment safe havens. The reason, paradoxically, is the current crisis sweeping through Greece, Portugal and the other weaker members of the eurozone. Now, instead of fleeing ex-communist emerging markets, investors are increasingly wary about buying the debt of countries that a year ago seemed rock solid.

“In one sense we are the beneficiaries of this turmoil,” said Dominik Radziwill, Poland’s deputy finance minister. “We have become an alternative for investors who are looking at the periphery of Europe. We can see increasing interest in investing in Polish debt from foreign investors.”

The currency’s strength has prompted a change of tack from the central bank; just a few months ago it was worried about the weakening trend slipping out of control, which could have endangered the banking system as businesses and consumers with foreign currency exposure were driven into bankruptcy. But now the bank is sending signals that it may delay raising interest rates to keep the zloty weaker.

But just as no one predicted the zloty’s fall, and few foresaw its subsequent rise, the currency’s future is murky. Adding to the uncertainty is Radziwill, who feels that the current strengthening trend may have run its course.

“Now the factors that strengthened the zloty may be weakened. We could even imagine a reversal of the trend,” he said.

That kind of uncertainty makes companies want to tear out their hair. They would prefer a stable exchange rate, rather than the wild gyrations of the last year.

“These swings create enormous problems for us,” said Mateusz Figaszewski, spokesman for Solaris, a bus maker located near the central Polish city of Poznan. “We really simply want Poland to join the euro so that this uncertainty can end.”