Currency report: Uncertainity sinks złoty

Tuesday's newspapers covered the story of top Polish political parties booking the best billboard locations for the early elections. Suddenly it became apparent that the ongoing coalition and budget talks may be just a political smokescreen. The euro climbed to zł.3.8650 by Wednesday afternoon and the dollar was offered at zł.3.1950.

Later on in the week Law and Justice issued a 'stability pact' proposal to other parties, which received a reluctant, but generally positive reaction. This captured investors' attention. The złoty fought its way back to zł.3.8330 against the euro on Thursday, then came back up to zł.3.86 on fears of changes in the legal acts concerning the National Bank of Poland. However, come Friday, the złoty showed some strength again. Late afternoon had the euro worth zł.3.8420 with the dollar trading around zł.3.1750.

The figures published this week showing inflation were ignored by the market, though they pointed to an increasing likelihood of an interest rate cut in January.

Krzysztof Kowalczyk

WGI Dom Maklerski