Currency report: How low can you go?

It created a strong sell signal for the euro and led the single currency to its lowest level against the złoty in more than three years. Local traders were talking about possible Finance Ministry intervention in order to strengthen the currency because the stronger the złoty is in December the lower the country's foreign debt in relation to GDP.

The złoty stopped the rise against the euro and the dollar late on Tuesday as the situation in the region worsened after Fitch downgraded its debt rating for Hungary. Immediately, the forint lost ground against a weakening euro and other currencies in the region. EUR/PLN jumped to zł.3.88 on Friday but the single currency was unable to sustain gains. Next week the złoty could resume the uptrend if the situation in Hungary stabilizes.

Despite good US job data last week, the dollar suffered the biggest weekly drop against the euro since October, after European Central Bank officials signaled they may add to this month's interest-rate increase, narrowing a yield gap with US assets.

Maciej Chojnacki

WGI Dom Maklerski