Currency report: Złoty regains momentum

The EUR/USD, the major currency pair in the world, moved within the $1.4660-$1.4735 limits during the course of the week. The situation changed on Thursday after US Federal Reserve Chairman Ben Bernanke gave a speech before the Women in Housing and Finance and the Exchequer Club in Washington. Bernanke pointed that the American central bank will need to do all it can to avoid a recession in the US.

His words raised expectations that the Federal Open Market Committee will cut 50 basis points from the current 4.25 percent main interest rate and the EUR/USD shot to over $1.48, reaching $1.4815.

Since no macroeconomic reports were published in Poland, the Polish currency followed global markets. Investors were looking for alternative forms of investment that could provide higher yields, and the złoty can provide just this. Expectations of lower interest rates in the US and an interest-rate hike here has led to capital inflows to Poland.

The złoty is back on track to new highs against both the euro and the dollar. During the course of last week, the USD/PLN declined from zł.2.4605 all the way to zł.2.4170, while the EUR/PLN dropped from zł.3.6090 to zł.3.5790.

Adam Narczewski, X-Trade Brokers Dom Maklerski S.A.