Currency report: Złoty weakens

Immediately after the start of trading, EUR/PLN tried to break a key resistance at zł.3.90 but failed to do so in a sustainable way. The złoty slipped against the euro along with other emerging markets on Wednesday. Foreign investors were still reluctant to re-enter emerging markets as US yields began to rise once again after PPI data in the US supported an interest-rate hike at the Federal Open Market Committee meeting next week. Even a correction on the Hungarian forint on Thursday that strengthened all currencies in the region was unable to hold off the złoty's depreciation.

The złoty could take further hits in the coming days as Prime Minister Kazimierz Marcinkiwicz commented that it should be valued at zł.4.20 to the euro and that the government may influence the market with an appropriate policy. If we add possible earlier elections or government reconstruction, EUR/PLN could easily reach zł.4.

Maciej Chojnacki
WGI Dom Maklerski