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Cheaper oil is slowing the złoty’s rise. The euro rate remains below 4.35 zł
The currency market is watching the Fed today, while the zloty remains under pressure from expensive oil
For 1000 zł, you could buy about 230 euro today, as the EUR/PLN rate is holding just below 4,35 zł. In the morning, at 9:48, the euro cost 4,3432 zł and was practically unchanged from Tuesday’s reference rate. For people exchanging money, that means a quiet morning, with no clear difference when converting larger amounts.
The market is still being driven by the same factor that has weighed on the zloty before as well: expensive fuel and Brent crude. Analysts at PKO BP point out that the pace of oil price increases has recently slowed, and any signs of de-escalation in the Middle East could create room for a short-lived correction. For now, however, the euro rate has held above 4,3500 zł, after rebounding from that level on Monday.
The most important event for the currency market comes tonight. After a two-day meeting, the Fed is expected by investors to raise the federal funds rate for the first time in three years, by 25 pb. Also crucial will be whether the U.S. central bank signals further monetary tightening in the coming quarters. The futures market is pricing in a total of another 75-100 pb of rate hikes, and the move in U.S. 2-year Treasury yields paints a similar picture.
Against the Fed backdrop, Polish monetary policy looks more cautious. Most members of the RPP do not intend to raise rates, which limits support for the zloty against the euro and the dollar. Ireneusz Dąbrowski said that interest rate stability is currently the most likely scenario, and that tightening too early would not be justified. He also added that the second-round effect linked to fuel will be weak and limited, while CPI inflation may rise slightly above the upper end of the target band, but only temporarily.
In the case of the dollar, the situation is calmer today than it is for the euro. The USD/PLN rate fell by 0,2 grosza to 3,7603 zł, so for 5000 zł you can buy about 1330 dollars. The USD/PLN pair has been moving for two months in the 3,60-3,81 zł range. That matters because the upper end of that range is also this year’s dollar high. If it were broken, it would open the way toward around 4 zł per dollar. The British pound was meanwhile quoted at 5,0669 zł.
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