The money storm before the calm
Finance Minister Mirosław Gronicki said he believes longer-term money will replace speculative capital over the coming months, thereby stabilizing the Polish currency.
The złoty's recent fall from grace was mainly due to changes in the US's interest rate expectations. "What is going on with the złoty is based on [events] outside the country, chiefly in the US," Gronicki said. "But when hot money leaves, real money comes back in. Therefore after a correction, I expect the exchange rate to stabilize."
US interest rates are expected to rise steeply and this has caused volatility on the European currency markets. Emerging markets are feeling the pinch in particular, as investors move their cash out of riskier assets and back into dollars.
The złoty was always going to be hurt hard by a resurgent dollar. As the top-performing currency of the new member states, it had a higher perch to fall from, and suffered a six percent drop against the euro last week, from 32-month highs hit in early March.
All eyes are now on the złoty, with analysts divided on how the currency will perform over the coming months. A general election in the summer will continue to cause unease in the market, and some expect further weakness due to a predicted rate-easing cycle in Poland. Before March, the złoty had gained 19 percent against the euro since EU entry in May. (Reuters)
The złoty's recent fall from grace was mainly due to changes in the US's interest rate expectations. "What is going on with the złoty is based on [events] outside the country, chiefly in the US," Gronicki said. "But when hot money leaves, real money comes back in. Therefore after a correction, I expect the exchange rate to stabilize."
US interest rates are expected to rise steeply and this has caused volatility on the European currency markets. Emerging markets are feeling the pinch in particular, as investors move their cash out of riskier assets and back into dollars.
The złoty was always going to be hurt hard by a resurgent dollar. As the top-performing currency of the new member states, it had a higher perch to fall from, and suffered a six percent drop against the euro last week, from 32-month highs hit in early March.
All eyes are now on the złoty, with analysts divided on how the currency will perform over the coming months. A general election in the summer will continue to cause unease in the market, and some expect further weakness due to a predicted rate-easing cycle in Poland. Before March, the złoty had gained 19 percent against the euro since EU entry in May. (Reuters)
