Polish currency more and more weakening
22:13
We are increasingly aware of the further weakening of the zloty and we expect that in this respect the zloty may stand out from other currencies in the region, wrote Citi Handlowy bank. As indicated by Piotr Kalisz and Cezary Chrapek from Citi Handlowy, the Friday conference of the NBP president turned out to be a big surprise for market participants hoping for quick rate hikes.
"Responding to the questions asked earlier, the head of the central bank said that the probability of interest rate increases during the term of office of the current Council is practically zero. Referring to the asset purchase program (QE), President Glapiński stated that 'there is absolutely no question' about its ending,” the ban analysts reminded.
As they noticed, in reaction to the above comments, the market rates fell and the FRA market "wiped out" part of the previously priced-in scenario of rate hikes.
Citi Handlowy economists also predict that the prospect of negative real interest rates and the MPC's mild rhetoric may have an impact on the PLN exchange rate – all the more so as the December NBP interventions show that the central bank would not be worried about a further weakening of the zloty.
As shown by data collected by Citi Handlowy, last week the Polish zloty weakened the most among selected emerging market currencies. The second was the Hungarian forint.
