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The złoty is strengthening after weakening. The dollar and franc are falling.
The złoty bounces back after Monday’s jitters. The market is already looking at the MPC meeting
Tuesday brings a calmer tone after the earlier weakening of the złoty. EUR/PLN slipped to 4,3705 zł, returning inside the several-week range of 4,36-4,40 zł. For people exchanging money, that means the Polish currency has recovered part of its losses from the start of the week, although the scale of the move is not large.
The move is even clearer on USD/PLN. The rate fell to 3,8849 zł after Monday’s move toward 3,93 zł. In practice, the dollar is cheaper today than it was yesterday, and the złoty has strengthened against it by more than 0,5% from Monday’s close.
If someone is buying foreign currency for a trip or settling accounts in dollars, that change matters right away. On an amount of several thousand złoty, the difference is not dramatic, but on larger exchanges it becomes noticeable. The rate also remains close to levels seen in recent weeks, so for now the market is not signaling any sharp shift in sentiment.
At the center of investors’ attention is the two-day meeting of the Monetary Policy Council, which began today. Together with moves in the euro-dollar market, it is currently helping shape the valuation of the złoty. In core markets, the weakness of the euro remains important, as the single currency weakened more noticeably against the dollar on Monday.
EUR/USD, the euro-dollar exchange rate, broke below 1,1200 on Monday and briefly fell to 1,1160. Pressure on the common currency is being reinforced by concerns about France’s fiscal situation and reports of early parliamentary elections in Spain. That was followed by a weak reading of August industrial orders in Germany, which fell by 10,6% m/m, compared with expectations of -1,0%.
On Tuesday, the euro is trying to recover some of its losses, and EUR/USD is quoted at 1,1241, up 0,2% from Monday. ING analysts say euro weakness may continue to weigh on pricing, while the market’s attention remains focused on Europe and on MPC decisions. Economists at Bank Millennium add that 4,39 remains a barrier for EUR/PLN, while the key resistance level for USD/PLN is 3,93.
Improved sentiment is also visible in other złoty pairs. CHF/PLN has dropped to 4,6753 zł, nearly 5,5 grosz below Monday’s high. GBP/PLN is quoted at 5,1491 zł, and the pound has already given back more than 3,5 grosz from Monday’s multi-year high.
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