TMS weekly FX Commentary

On the domestic market we have just witnessed a corrective move. This should not be too surprising. The złoty has appreciated by a few percent recently leaving some space for upcoming correction. Depreciation started after industrial output and PPI figures were released, lowering the risk of quick and significant rate hikes. The data boosted some sell orders for the złoty and the currency lost more 1.5% from its highest quotes (5.8% deviation from the old parity). The market reacted positively to the new Finance Minister. The złoty did not go up, but more importantly, did not go down in value. Normally the markets react nervously to such news but Premier Belka's decision to make the announcement in advance exerted a calming influence.