Currency report: Złoty back on the up

The last act of the snap elections drama took place on Monday. Shortly after 3pm the news hit the market that the president was still considering dissolving parliament. EUR/PLN quickly rose to zł.3.8250, as did USD/PLN reaching the level of zł.3.21, unattained since January 3. However, five hours later Lech Kaczyński made it publicly known that he would not take any action to force early elections. Immediately the Polish currency was back in shape, regaining all of its losses.

Weak inflation pressure was suggested by a low January CPI reading of 0.7 percent and a moderate rise in average earnings of 3.6 percent. This fueled the domestic and foreign demand for Polish treasuries, pushing up their prices and strengthening the złoty.

By Friday afternoon EUR/PLN had dipped beneath zł.3.76 repeatedly. A low PPI figure of 0.5 percent confirmed that everything looked set for a new eight-month low of less than zł.3.75.

Maciej Chojnacki,

WGI Dom Maklerski