Currency report: Economic data supports złoty

On Monday morning the euro peaked at zł.4.09, but the next hours and days were gainful for the złoty. On Friday the EUR/PLN cross was traded at zł.4.04 and USD/PLN at $3.19. Support for the Polish financial markets came from better than expected economic data regarding the C/A and inflation. Poland's current account deficit widened in May to EUR 209 (zł.847) million in April from EUR 154 (zł.624) million in April, but came in well below market forecasts at EUR 418 (zł.1,694) million. The annual inflation eased to 0.8 percent in June from 0.9 percent in May, under expectations of a mild rise to one percent.

Polish central-bank policymakers cooled expectations of an early rise in interest rates. Andrzej Wojtyna said on Wednesday in the afternoon, that any slowdown in global growth could provide room for a small rate cut. Stanisław Nieckarz announced on Friday that there are no reasons to change interest rates until at least the end of 2007. Interest rates are now at an historic minimum of four percent, and we do not expect any rate move until the end of 2006.

Marek Wegrzanowski

X-Trade Brokers Dom Maklerski