Strong currency fails to break the zl. 4 barrier
Despite the expectations of market players, the zloty did not break the exchange rate barrier of zl. 4 to $1 last week.
But the currency did manage to close the gap last Monday when it traded at zl. 4.02 to $1, reaching a 17-month high after investors gave a cautiously optimistic welcome to the passage of the 2001 budget.
During the week, however, the zloty began to lose ground against the U.S. currency, trading at zl. 4.12 to $1 late last week. The loss was blamed on unease in the financial markets over interest rate cuts. "Investors are expecting the rate cut, and it always adversely affects the zloty's exchange rate," said Marek Zuber, an analyst at Bank Przemyslowo Handlowy.
The negative sentiment continued into the weekend despite an upbeat outlook from companies that see sales picking up in the coming months, according to a monthly survey released last week, and positive inflation figures for January.
With food prices up by only 0.7% in January compared to the previous month, inflation dropped to 7.5% year on year, according to data released by the Central Statistical Office (GUS) last Wednesday.
