On Tuesday morning the zloty clearly appreciates against the main currencies, responding to the decline in market fear of Russia’s aggression towards Ukraine and in anticipation of the domestic inflation and economic growth data released today.
At 09:11 the EUR / PLN exchange rate fell by 2.9 PLN to 4.5210 zlotys, correcting more than half of the losses from Friday, when the zloty strongly depreciated on the wave of fears of the Russian-Ukrainian war. The USD / PLN rate retreated to PLN 3.9885, losing 3.8 groszy compared to yesterday’s close. The CHF / PLN pair fell the most, as much as 3.9 PLN. In the morning you had to pay PLN 4.3160 for the Swiss franc.
The morning appreciation of the zloty, as well as of other Central European currencies, is mainly the effect of reducing fears of a possible Russian aggression towards Ukraine. However, it is worth bearing in mind that this is still the hottest topic in the financial markets and the sentiment can change 180 degrees at any time.
The zloty in the morning is also supported by expectations for the domestic data on inflation and economic growth to be released today by the Central Statistical Office (GUS). Both reports will be published at 10:00.
January is expected to see a further strong rise in inflation in Poland. According to forecasts, consumer inflation will accelerate to 9.3 percent. year on year from 8.6% in December. However, after the recent inflation surprises in almost the entire region, one must take into account that inflation will be higher than expected. It is possible that it will approach 10%.
According to forecasts, in the fourth quarter the dynamics of the Polish Gross Domestic Product (GDP) accelerated to 7.1%. year on year from 5.3 percent in the third quarter. Contrary to the inflation data, these forecasts should not differ significantly from the actual reading, hence the data will arouse less emotions.
From the point of view of the zloty, soaring inflation and high economic growth in Poland heralds even greater interest rate increases by the Monetary Policy Council. It was clearly suggested by the NBP governor Adam Glapiński at the last press conference, saying that “the monetary tightening cycle will last longer than expected by the market (…) and the target point at which we will stop will also be higher”. And this means pressure on the strengthening of the Polish currency.
Author: Marcin Kiepas, Tickmill analyst
Source: GUS and ISBnews
