Currency report: Złoty cheaper

Despite the fact that the agreement seemed to banish the threat of early elections, the złoty never regained its strong stance from before the political fuss, losing slightly to the euro and the dollar compared to the week before. No sharp moves were seen on the EUR/PLN. The best quotes recorded for selling and buying the euro last week were zł.3.84 and zł.3.80 respectively, and on Friday the euro-złoty exchange rate stood at around zł.3.83. The USD/PLN did experience fast-paced changes, though, thanks to a globally strengthening dollar and the interest-rate policies adopted by the Polish and US central banks. While the NBP decided to cut rates from 4.5 percent to 4.25 percent, the Federal Reserve did the exact opposite. Late Friday afternoon the dollar traded at zł.3.19, over 1 percent higher than the week before.

Come March we may see the Polish-US interest rate spread grow to 75 basis points. Foreign capital might start finding its way back to US shores, leaving Poland with its dropping risk premium and black clouds gathering over the stock market. The złoty will be challenged and may come out wounded.

Krzysztof Kowalczyk

WGI Dom Maklerski