Euro above 4.35 zł despite improved market sentiment

Euro stays above 4.35 zł, the złoty shows no clear rebound

On Friday morning, the euro exchange rate stood at 4,3574 zł. That meant that 1000 zł bought just under 230 euros. For people exchanging larger amounts, however, what matters more than the reading itself is that the 4,35 zł level still acts as an important barrier for the złoty.

On Thursday, EUR/PLN fell by about one grosz after previously approaching a near two-year high at 3,3675 zł. Despite improving sentiment in financial markets and lower oil prices, the Polish currency was unable to strengthen more clearly. That shows that a single better day on the markets is not enough to quickly reverse the situation in the euro-zloty pair.

In practical terms, for people sending a transfer in euros or settling invoices in this currency, this still means an expensive exchange level. If the rate stays above 4,35 zł, the euro remains relatively expensive against the złoty, and the market sees the nearest stopping point around 4,40 zł.

PKO BP analysts said in the morning that their base-case scenario for the end of Friday’s session is for EUR/PLN to remain above 4,35 and USD/PLN to trade in the 3,77-3,80 range. For kantor.exchange readers, that means the market is not yet signaling a quick return of the euro to lower levels.

The złoty is also being affected by today’s review of Poland’s rating at Moody’s. In the market’s view, this is an important point in the day, because with Polish bond yields still relatively high and the fiscal deficit very large, a downgrade of Poland’s credit rating would not be a surprise. At the same time, PKO BP expects the rating and outlook to remain unchanged.

Moves were smaller on other pairs. USD/PLN fell to 3,7945 zł, but it still remains close to resistance at 3,81 zł. The Swiss franc cost 4,6020 zł, almost the same as a day earlier, and the British pound was quoted at 5,0742 zł. Also in the background is EUR/USD, which rose on Friday to 1,1489 after previously falling to 1,1460.

Sources

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