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Moody’s rating downgraded, euro rate above 4.35 zł unchanged
The zloty starts the week under pressure after Moody’s decision and weaker labor market data
The euro rate is holding above 4,35 zł, and on Monday morning it stood at 4,3611 zł. For people exchanging money, that means 1000 zł would buy about 229 euro. That is above 4,33 zł, so the common currency costs a little more today than when the zloty was stronger.
The market did not react strongly to Moody’s Friday decision to cut Poland’s credit rating. It is the first such move in more than 20 years. The announcement itself did not come as a major surprise to investors, as the rating had already been on watch with a negative outlook for a year.
The zloty is also being affected by the external backdrop. High oil prices worsen Poland’s terms of trade, raise inflation risks and reduce risk appetite globally. On Monday morning, Brent crude fell to around 101 USD per barrel, after levels close to 110 USD a week earlier. That is good news for emerging-market currencies, including the zloty.
Domestic labor market data is not helping. GUS said that in August, annual wage growth in the corporate sector slowed to 5,6% from 6,8% in July. Slower wages can be disinflationary, meaning they limit pressure on prices, but at the same time they reduce the chances of interest rate hikes at the NBP.
USD/PLN was still close to 3,8013 zł in the morning, while the euro-to-dollar rate, EUR/USD, stood at 1,1480. The Swiss franc cost 4,6154 zł, and the British pound 5,0828 zł. In practice, this means the dollar has not yet moved above 3,81 zł, while the franc and pound remain at levels seen at the end of last week.
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