FX Commentary

The USD/PLN rate has appreciated to 3.40 and the EUR/PLN fluctuates around 4.30. There are no meaningful factors which could hamper the appreciating trend on EUR/PLN, apart from the willingness to cash in on the profit. Even disturbance on politic scene didn't affect the strength of Polish currency. After Premier's Belka won the Parliamentary vote of confidence, the złoty continued to gain. At the moment there are no fundamental stimulus which could contribute to the change of investors' moods concerning the złoty. The draft budget has been approved by many economist and assumes a decline in the budget deficit to zł.35 billion. We should also keep in mind that rating agency S&P recently announced the possibility of increasing Poland's credit rating. This statement helps create long term support for the złoty. The coming week brings the monthly meeting of Monetary Policy Council. In our opinion, the MPP won't change interest rates this time round. However, we should bear in mind that the latest decision of MPP suprised the market, due to that fact we expect that on the EUR/PLN market investors might behave nervously. In our opinion the possible correction of the appreciating trend on EUR/PLN should be used for sale EUR/PLN and USD/PLN. We should also notice that in the close future foreign investors will also purchase złoty's in order to acquire PKO BP shares.
Marek Zuber
www.tms.pl