On Wednesday, the zloty should remain relatively stable in anticipation of today’s decision of the Monetary Policy Council (MPC) on interest rates in Poland, as well as tomorrow’s press conference of the President of the National Bank of Poland (NBP) and the results of the meeting of the European Central Bank (ECB).
At 09:05 the euro cost PLN 4.7274, the dollar cost PLN 4.7720 and the Swiss franc PLN 4.8475. All three currencies remained at yesterday’s close levels when, after considerable fluctuations during the days, the zloty finally weakened against the euro and the dollar, while practically keeping its valuation against the Swiss currency.
The Wednesday’s event on the domestic currency market is the meeting of the Monetary Policy Council. The decision will be announced in the afternoon. In line with market expectations, the Council will raise the cost of money in Poland for the 11th time. This time by 25 basis points (bp). This will mean an increase in the main rate to the level of 6.75%. from 6.50 percent yet. In the opinion of the market, this will not be the last hike. A similar increase is forecasted in October.
The 25 bp rate hike at today’s meeting is already included in the prices and should not provoke any major, and even more permanent, reaction of the FX market. Other decisions are. A possible 50 bp hike will strengthen the zloty, and the lack of a rate hike will weaken it.
In the baseline scenario, where rates in Poland rise to 6.75%, the currency market will postpone its reaction until the press conference of the NBP president Adam Glapiński, scheduled for Thursday. He will look there for an answer to the question whether the September decision of the Council ends the entire cycle of tightening the monetary policy in Poland? If that were the conclusion, then with the aggressive (and not recent) increases in the cost of money by the ECB (+50/75 bp) and the Fed (+75 bp), due to the narrowing difference in the cost of money, it would create a pressure on the weakening of the Polish currency.
In the coming weeks, not only the issue of interest rates will determine the performance of the zloty, but also how strongly it will slow down economic growth in Poland or the behavior of EUR / USD, and above all, how the energy crisis will develop further.
Source: ISBnews
