Currency report: Political struggles

This dramatically improved the government's credibility as to financial decisions, which was reflected by EUR/PLN dropping as low as zł.3.757 on Monday morning. The złoty's appreciation wasn't much to the liking of Prime Minister Marcinkiewicz, who expressed his concern about the weakening competitive position of Polish exporters. EUR/PLN was back up to over zł.3.79 by mid-Tuesday, but failed to accelerate further.

In the second part of the week, hopes for political stability were shattered. Controversy behind budget voting, threats of holding new elections this spring and the rebound of coalition talks blurred investors' view and had the złoty zigzagging up and down. EUR/PLN's move back above the zł.3.80 resistance point on Thursday was largely aided by the dollar's gains against the euro.

On Friday afternoon the złoty was trading consistently above zł.3.80 against the euro and zł.3.15 against the dollar. Next week a return to lower levels is highly probable providing that a stable Parliament coalition is finally formed.

Krzysztof Kowalczyk

WGI Dom Maklerski