The NBP president spoke on the weakening of the zloty

2021-11-19 17:00

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2021-11-19 17:00

The NBP president spoke on the weakening of the zloty
The NBP president spoke on the weakening of the zloty
/ NBP

The weakening of the zloty, especially observed in recent days, is probably related to the strengthening of the dollar on the global market, wrote the NBP president Adam Glapiński in response to PAP Biznes’s questions. He noted that the PLN exchange rate is floating and if market factors speak for changes in the exchange rate, especially if they are not too strong, then it is difficult to expect a reaction from the NBP.

“As a rule, we do not comment on changes in the zloty exchange rate, but in recent days the zloty has actually weakened, and we are constantly analyzing the factors behind it. The weakening of the zloty, especially observed in recent days, is probably related to the strengthening of the dollar on the global market. The value of the dollar usually entails a decline in the exchange rate of our region’s currencies, while the zloty may also be adversely affected by a marked increase in the number of cases of Covid-19 in Europe and Poland, as it may mean the necessity to introduce restrictions, losses for the economy and additional budget expenses. on the border with Belarus, it contributes to a certain outflow of capital from the Treasury securities market and the WSE, which is temporary. These phenomena are neither unusual nor dangerous, but they certainly do not help the zloty, “wrote Glapiński.

“As for the comments that the zloty is weak because – unlike the central banks of the Czech Republic and Hungary – the NBP does not clearly declare the cycle of interest rate increases, this is a misguided argument. For 10 days the zloty depreciated against the euro more than the Czech koruna, but less than the forint. I explained why we are not making strong declarations about future decisions. At the same time, however, in a recent interview with PAP I emphasized that if the incoming data confirm the current assessment of the situation, the likelihood of further adjustments rates is higher than they are kept at the current level. Market participants expect an increase in NBP interest rates, and the rates expected by the market are much higher than the current ones. In other words, this factor should not be conducive to a weakening of the zloty, he added.

Since the morning the zloty has weakened against all major currencies to levels that have not been seen for a long time. At the peak of the Friday’s afternoon session, the EUR / PLN rate reached 4.69 and marked a new 12-year high. USD / PLN was traded at 4.16 – the highest level in a year. As part of Friday’s strengthening the dollar tested the level of 1.125 / EUR – the lowest level in a year.

The President of the NBP noted that the central bank did not intervene in the currency market this year, but still reserves the right to do so.

“The zloty exchange rate is floating and if the market factors speak in favor of changes in the exchange rate, especially if they are not too strong, it is difficult to expect our reaction. Changes in the exchange rate are natural. However, we reserve the right to conduct foreign exchange interventions, but we do not conduct them without Currency interventions are not ruled out by other central banks, especially in smaller, open and developed economies. They also often exercise their right to intervene, sometimes much less restrainedly than the NBP. maintain that we are acting towards zloty depreciation or we prefer a weak zloty “- wrote Glapiński.

“The exchange rate obviously has an impact on import prices, but this impact should not be overestimated. I said that even a relatively strong appreciation of the zloty would not significantly reduce inflation, but would be costly for the economy. However, in the conditions of the current elevated inflation, further depreciation of the zloty would not be consistent. with the NBP interest rate policy, “he added. (PAP Biznes)

pat / mfm /

Source:PAP Biznes

About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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