photo. Own material
The EUR / PLN exchange rate recorded the fourth consecutive downward session yesterday and the quotations dropped to 4.5860 at times, despite the fact that last Friday they temporarily reached a 12-year high above 4.72. In addition to the support from a moderately positive sentiment towards Central and Eastern European currencies, the zloty is supported by press speculation about the possible approval of the National Reconstruction Plan by Brussels and the actions of the National Bank of Poland (Wednesday’s decision to organize a fine-tuning operation and strengthening the narrative of the NBP president on the need to normalize monetary policy) .
As a result, this week the zloty remains the leader of the increase in the value against the euro among the CEE currencies, despite yesterday’s decision of the Hungarian central bank to increase the 1-week deposit rate to 3.10% from 2.90% (another significant extension of its spread to 2.1% of the main interest rate). On the domestic debt market Thursday was another day of increases in yields along the curve, but the 2Y was the strongest, with the yield reaching 3.02% against 2.89% at Wednesday’s close.
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For two days the eurodollar has been stabilizing in a narrow, around half-cent range, 1.1310 – 1.1360, awaiting new impulses. The valuation of the dollar remains in a clinch of concerns about the potential economic consequences of the new SARS-CoV-2 virus mutation (falling market expectations for normalization of monetary policy in the US) and Tuesday’s change in the narrative of the Fed president, who admitted that the current elevated inflation levels are not temporary. The EUR / CHF has also been consolidating – for three days – around the level of 1.0415. The declines in yields returned to the core bond markets. The yield of the Bund and the US 10Y fell by 5 bps to -0.38% and 1.43%, respectively.