Currency report: Złoty's three-year high

Starting from Tuesday the Polish currency showed strength that was growing by the hour. By Thursday USD/PLN had slid to zł.3.14 - its lowest level since September. EUR/PLN did not get left behind. It's decline reached levels beneath zł.3.80, which was the lowest recorded exchange rate since June 2002.

The reason was clearly the excessive foreign capital inflows experienced by the Polish economy. The Warsaw Stock Exchange's continuing boom, the highly successful primary market auctions of Polish bonds, and the growing prices of T-bonds already in the market all made the picture very clear: investors were leaving the US markets looking for younger and more dynamic emerging markets, Poland among them. Later in the week the złoty refused to let go of its gains and was aided by politicians that said that an even much stronger złoty at the end of 2006 wouldn't surprise them. Going into next week the złoty's position looks very strong.

Maciej Chojnacki

WGI Dom Maklerski