TMS FX Commentary for week ending May 17

The złoty weakened to 4.0% deviation from the old parity. The USD/PLN pair has consolidated above 4.00, and the EUR/PLN to around 4.77.Unfortunately, at the time this commentary is being written, we still do not know the result of the vote. Everything indicates that the Belka's cabinet will not get the Parliament's support, at least not in the first attempt. In our opinion this scenario is not favourable for the value of the złoty, but it is already hugely discounted by the market. That is why we do not expect the market to react very nervously. Of course if Belka is not backed, the market will be full of anxiety over the Hausner's plan implementation. It should be remembered, nevertheless, that it is possible for this government to be backed in consecutive attempts, when a less number of MPs is required to win the vote. The market is full of rumours saying that Ministry Of Finance is going to convert some currencies into PLN. It is said that from the original EUR 900 millions the Ministry still has a few hundred thousand euros, which should temporarily appreciate the złoty. In the coming days industrial output figures will be released. We expect good information for the złoty, so the end of the week should be good for our currency. www.tms.pl