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The euro and dollar are rising after Independence Day. The EUR/PLN and USD/PLN rates are stabilizing.
The zloty edges higher, but the dollar still holds the upper hand
Thursday morning on the foreign exchange market brought an attempt to calm zloty quotes after two days of weakening. The spotlight remains on USD, as it is the dollar’s strength, driven by U.S. inflation data and the Fed’s message, that is having the biggest impact on currency valuations today.
After domestic investors returned to the market following Wednesday’s Independence Day holiday, the zloty recouped only part of its losses against the euro. The EUR/PLN rate was down 0.14 percent in the morning and stood at 4,4027 zł. A day earlier, on thin liquidity, the euro had risen to 4,4162 zł, so the pullback is limited.
At this level, 1000 zł buys around 227 euro today. In practice, the difference from Wednesday’s peak is not large, but for people exchanging bigger amounts it matters, because a few grosz on the rate quickly translates into concrete złoty.
The picture is even clearer on the dollar. The USD/PLN rate stood at 3,9693 zł in the morning, three grosz above Tuesday’s close. That means 5000 zł buys around 1260 dollars today. That is less than at a lower rate, so those settling in USD will feel the change faster than buyers of euro.
The dollar got a boost from Tuesday’s U.S. consumer price inflation CPI data. Prices rose 0.4 percent month on month, after a 0.6 percent increase and above the market consensus of 0.3 percent. The market therefore began pricing in a December rate hike by the Fed as almost certain. In addition, a hawkish tone was reinforced by comments from Chris Waller, who did not rule out a move of even 50 basis points.
Against the backdrop of a stronger dollar, emerging-market currencies are also performing more weakly. Pressure is being amplified by tensions in the Middle East and the lack of a breakthrough after talks between Ukrainian and Russian representatives mediated by the U.S. In such conditions, the zloty remains vulnerable to swings, although economists believe the room for further weakening is now smaller.
In a morning comment, PKO BP pointed out that after the recent gains in EUR/PLN and USD/PLN, some of the adverse global factors are already priced in. Analysts expect EUR/PLN to stabilize around 4,41, and USD/PLN near 3,97-3,98.
Domestic quotes are also being influenced by signals from the Monetary Policy Council. Iwona Duda spoke about the possibility of tightening monetary policy if certain conditions are met. Gabriela Masłowska said that although the latest projection provides grounds for a rate hike, the MPC should wait until the beginning of the year before making a decision. The foreign exchange market reacted calmly to these remarks, as foreign factors are taking center stage today.
In the morning, CHF/PLN was quoted at 4,7684 zł, while GBP/PLN stood at 5,2684 zł. The franc and the pound therefore remain highly valued, which for people repaying loans, exchanging savings or sending money from abroad still means a higher cost of buying these currencies.
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