An interesting day

At the beginning of the day, the złoty rose, with the EUR/PLN rate falling to 4.7400, while the USD/PLN traded at around 3.90. Later in the day, we experienced a very short-lived sell-off of the złoty, and the Polish currency lost 1% of its value as a result of Fitch downgrading its credit rating for local currency debt. The EUR/PLN rate then went up to 4.7700, while the USD/PLN level jumped to 3.9450. However, the złoty quickly recovered from these levels. Investors are still waiting for next week's vote of confidence in the new government, and this will be a difficult time for new Prime Minister Marek Belka and his cabinet. We think that just before the vote, the Polish currency market will become very choppy, and the zloty will probably lose some of its value. www.tms.pl