All eyes on the RPP

At the start of yesterday, the zloty lost some of its previous gains. The deviation from the old basket rose to 0.5% while the EUR/PLN rate climbed to 4.67 and the USD/PLN rose to 3.8550. However, it was only a short-lived correction and later in the day there was another wave of zloty buying. At the close, the USD/PLN rate fell to 3.8250 while the EUR/PLN tested the latest minimum at 4.6300. All eyes were focused on the Polish Monetary Policy Council (RPP) meeting yesterday. As widely expected, the RPP left interest rates unchanged, a decision that had no impact on the market. We think, though, that the RPP will increase rates at its next meeting in June. A positive sentiment continues on the market, despite the lack of important news form the political field, with investors appearing fairly certain that Marek Belka's cabinet will find sufficient support in the final round of voting. www.tms.pl