Currency report: Up and down on the FX market

The złoty and other emerging markets' currencies firmed after comments by the Federal Reserve, which kept interest rates on hold. A moderate US slowdown accompanied by lower inflation supported the markets. 

Polish assets also drew support from a competent showing by new central-bank governor Slawomir Skrzypek at a news conference, after the National Bank of Poland also left rates on hold at 4.0 percent on Wednesday.

The EUR/PLN fell to zł.3.90 and USD/PLN to zł.3.01.

Several Polish central bankers like Marian Noga and Halina Wasilewska-Trenkner called for a rate rise, but they are still a minority on the Monetary Policy Council. Other bankers are waiting for a new inflation projection in April, and hope inflation in Poland holds below two percent for most of 2007. If so, a rise in interest rates should not be necessary.

At the press conference after the rate decision, Slawomir Skrzypek repeated his belief that Poland should adopt the euro when it is best for Poland, but sidestepped a question about the benefits and costs of the single currency.

Marek Węgrzanowski

X-Trade Brokers Dom Maklerski SA