Currency report: Another volatile week

Over the following days the złoty eased against the euro and the US dollar to zł.3.8950 and zł.3.00, respectively, extending losses. This came after comments from the European Central Bank on Thursday that investors took as a sign that the bank will raise interest rates in March. Some economists now expect the Polish central bank to raise rates by only 25 basis points this year, though many think it will not raise rates at all this year.

On the international market, the euro rose against the dollar on Thursday as ECB President Jean-Claude Trichet signaled a rate increase in March. Trichet said the bank will show "strong vigilance" in monitoring eurozone inflation, potentially signaling a few rate hikes this year. The ECB kept rates unchanged at 3.5 percent on Thursday, as expected, as did the Bank of England at 5.25 percent. Expectations of a further rise in borrowing costs this year still remain.

Marek Węgrzanowski

X-Trade Brokers Dom Maklerski SA