Dollar close to 3.90 zł, franc nearly 4.70 zł on the currency market

Euro and dollar under pressure, while the franc edges toward zł4.70

Friday morning brought a slight correction on the currency market. After a series of sharp moves, USD/PLN pulled back from the 3,90 zł level and stood at 3,8858 zł in the morning. For someone exchanging 1000 zł, that means about 257 dollars today, so less than when the rate was nearing 3,90 zł.

EUR/PLN also slipped slightly and stood at 4,3754 zł in the morning. That is still a level clearly sensitive to global sentiment, but without any sharp move at the Friday open itself. The złoty remains influenced by a strong dollar and weaker appetite for assets from Central and Eastern Europe.

The clearest sign of this is visible in CHF/PLN. The Swiss franc cost 4,6991 zł in the morning and came close to 4,70 zł, its highest level since the first half of July. In practice, when exchanging 5000 zł, the difference between a level close to 4,70 zł and a quote 13,5 grosze lower than the September low is already noticeable for a household budget.

Pressure on currencies and bonds is being driven by inflation concerns, more expensive oil and tensions between the US and Iran. Added to that is a sell-off in debt, especially French bonds, which has pushed up yields, meaning lower prices of government bonds. News about a plan for budget cuts in France calmed the market somewhat, but did not reverse the mood.

Investors are now waiting for Friday’s report on the US labor market, as it may decide how USD/PLN and EUR/USD behave over the next few hours. A weaker reading could help the złoty, while stronger data could support the dollar. Economists at ING also point out that a broad strengthening of the US currency is weighing on the entire region.

Sources

1. Current exchange rates: National Bank of Poland (average exchange rate table)