Currency report: Złoty gets budget boost

On Wednesday morning the levels of zł.3.80 against the euro and almost as little as zł.3.09 against the dollar were reached.

Further gains weren't to happen, though, as it quickly became apparent that the parliamentary cooperation of Law and Justice and the other parties would work well only as long as the new election threat looms on the horizon. Thus the złoty lost a bit of ground, especially to the dollar, which rebounded after a bad start to the week against the euro. The USD/PLN rate climbed to over zł.3.14, with the euro trading around the levels of zł.3.82-3.83. However, after disastrous US GDP data came out on Friday afternoon, the USD/PLN initiated a move back down towards zł.3.125.

Next week the political soap-opera continues. Nevertheless, if the anticipated interest-rate cut manages to beat the politicians to the headlines, we may see the złoty strengthening through increased demand for Polish treasury bonds.

Krzysztof Kowalczyk

WGI Dom Maklerski