Currency report: Złoty follows forint downwards

Also, higher than expected inflation data worsened the situation on the Polish debt market. The EUR/PLN rose from zł.3.86 on Monday to zł.3.90 on Friday. The USD/PLN cross did not break the support level at zł.3.00 and rose to zł.3.0450.

The CPI indicator rose in July by 1.1 percent, PPI rose by 3.5 percent, and industrial output rose by 14.3%. The data caused speculation that the Monetary Policy Council (RPP) could hike rates. According to Jan Czekaj from the RPP, Poland's central bank should keep rates flat at least until the end of 2006, after recent data showed the economy continued to recover without inflationary pressure. On Friday the złoty lost ground, following the forint, after the publishing of a new Convergence Program that suggests Hungary may not adopt the euro until 2011.

On the international market the dollar lost versus euro after weaker US inflation data could reduce the likelihood of a Federal Reserve rate hike in September.

Marek Węgrzanowski

X-Trade Brokers Dom Maklerski SA