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ECB raised interest rates. The euro exchange rate remains stable against the złoty
The ECB raised rates, and the złoty temporarily lost ground
The ECB (European Central Bank) decided to raise interest rates by 25 bp, the first increase since September 2023. For the currency market, this is an important signal, as the gap between interest rates in Poland and the euro area is narrowing. In practice, that could work against the złoty in the medium and longer term.
The move itself had been expected, but it was unusual. The European Central Bank is tightening policy despite high inflation and despite the fact that the euro area has most likely entered a period of weaker economic activity. From investors’ point of view, it also matters that the Monetary Policy Council is in no hurry to raise rates.
On the foreign exchange market, however, events in the Middle East had a bigger impact. The volatile situation around Iran increased nervousness and at times pushed EUR/PLN above 4,26 zł. Rates then calmed down, and in the morning the euro was trading at 4,2489 zł.
In this environment, the złoty’s exchange rate reacted mainly to shifts in global sentiment, rather than only to the Frankfurt decision. PKO BP analysts noted that markets still expect further ECB moves later in the year, although uncertainty is being added to by the ongoing energy shock.
Swings are more pronounced in USD/PLN. In the morning, the dollar was quoted at 3,6677 zł, and on Thursday it approached the 3,70 zł mark, its highest level in two months. The Swiss franc cost 4,6124 zł, and the British pound 4,9209 zł.
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