photo. Own material
The zloty started 2022 well, and its first week brought a fairly solid appreciation against the euro. The EUR / PLN exchange rate dropped to 4.5450, on the one hand, reacting to the positive sentiment towards the currencies of this part of Europe, and on the other hand, to the continuation of monetary policy tightening in Poland while expecting further solid interest rate increases.
Wednesday’s conference of the president of the National Bank of Poland and comments about the possibility of an increase in the cost of money to as much as 4% upheld the scenario valued by financial markets, which had a positive impact on the value of the Polish currency.
On the global markets, the picture of the eurodollar quotations has not changed in recent days. Since the end of November, this has been a fairly narrow sideways trend. Currently, the EUR / USD exchange rate is moving closer to its upper limit, i.e. the level of 1.1380, which was due to, inter alia, weaker than expected data for December from the US labor market (on the side of the increase in the number of new jobs) and higher than consensus HICP inflation in the euro area.
The USD / PLN exchange rate is currently trying to break the barrier of 4.00, which was our baseline scenario last week. We allow for the possibility to go below the above-mentioned level this week, but we do not believe that the movement will be permanent. The room for zloty appreciation is small, and the movements of the eurodollar – after reaching the upper limit of the 2-month side channel – limited.
Since December, the EUR / USD exchange rate has remained in an anemic upward trend and is currently moving around the monthly maximum, ie 1.1380. We hope that the next days that should pass quite calmly, bringing the current trends to be maintained.
The most important event of the week started will probably be the publication of inflation data in the United States, which may strengthen the dollar a bit, bringing it close to the lower limit of the current channel (1.1280).
As is the possible increase in geopolitical risk related to the talks on the de-escalation of tensions between Russia and Ukraine planned for the next few days.
On the domestic debt market, the last days brought further increases in yields. Interestingly, they were concentrated mainly on the long end of the curve, usually less sensitive to changes in interest rates, which resulted from the dynamic increase in the yields on the core markets.
Last week, the Polish 10-year-old more than exceeded the 4% barrier, following the achievement of the profitability of the American 10-year-old at 1.76% (only on Friday, the increase in this case was 11 bps) and only 5 bps, which now separates the Bund from the level 0% (maximum from mid-2019).