Polish currency has potential to strengthen, claims economist

The Polish currency, PLN, has the potential to strengthen due to the Polish economy’s resilience to the pandemic, Eryk Łon, a member of the Polish Monetary Policy Council (RPP), wrote for Radio Maryja – a religious, social and political ultra-conservative Polish radio station – on June 8. Founded in 1998, RPP is a government agency and a body of the National Bank of Poland (NBP), the central bank of Poland.

“I think that the złoty (PLN) has the potential to strengthen because the Polish economy is perceived as one of the most resistant to the coronavirus epidemic,” claimed Łon. “The behavior of the PLN exchange rate is one of the factors taken into consideration by the RPP when making decisions. There is even a theory according to which monetary conditions are determined by both interest rate changes and the behavior of the domestic currency exchange rate. According to this way of thinking, the strengthening of the domestic currency exchange rate can be seen as a kind of substitute for tightening monetary policy and weakening the exchange rate of the national currency as a substitute for its easing.”

He maintained the opinion expressed earlier that the three interest rate cuts made this year should be sufficient, and the “acute form of monetary stimulation” in the form of descent with nominal interest rates below zero is not currently needed.

According to Łon, the NBP employs people who, due to their “high competence,” could “make appropriate decisions on the composition of the company’s portfolio of shares” if the Polish central bank would decide to start buying shares.

(PAP)