Despite unfavorable circumstances, capital continues to flow into the Polish złoty (PLN), pushing exchange rates of major currencies against the złoty to increasingly lower levels. After yesterday’s surprising data releases, today’s macroeconomic readings bring no surprises. However, the most important publications are still ahead later in the week.
Spring Is Still Far Away
The Warsaw Stock Exchange is struggling at the start of the week. The WIG20 index lost nearly 2.4% yesterday and remains around the same closing level today before noon. However, Poland’s stock market is not an outlier—Wall Street closed in the red yesterday, Asian markets saw sharp declines, and in Europe, only Madrid and Milan stood out positively on Tuesday. The post-election euphoria seems to be fading in Germany, as local politicians face tough coalition negotiations. The ceasefire in the East remains as close as it is distant (reports suggest that a U.S.-Ukraine agreement on resource extraction is nearing completion, yet at the UN, the U.S. votes in sync with Russia, and the U.S. president offers only warm words for Putin).
Speaking of Trump, he is revisiting the topic of tariffs, this time targeting the crucial semiconductor industry. This environment, at least theoretically, should increase risk aversion. Although the “risk-off” sentiment is visible in many assets (Bitcoin has hit its lowest level since November), one currency remains a shining star in the forex market—the Polish złoty.
No One Can Stop the Złoty
Despite numerous risks, capital continues to flow into the PLN at a strong pace and shows no signs of slowing down. Some analysts link this to speculative capital movements associated with a potential ceasefire east of Poland, benefiting the Russian ruble the most. While the recent influx of capital into the złoty does have a speculative nature, yesterday, the Hungarian forint (HUF) kept pace with the PLN, but during this morning’s Tuesday session, the Polish currency took the lead in the region.
As a result, the EUR/PLN exchange rate is approaching 4.13, a level last seen in early 2018. This is a highly significant technical zone, as it coincides with the lows from seven years ago. Could this mean we are nearing a turning point for the złoty? If speculation is indeed the dominant driver, it would not take much for global investors to start cashing in their profits. Nonetheless, as of 11:00 AM, USD/PLN hovers around 3.95, CHF/PLN remains close to 4.40, and GBP/PLN is testing the 4.98 level from above.
Strong Poland, Weak Germany
Yesterday, Poland’s retail sales data delivered a positive surprise. On a year-over-year basis, retail sales rose by 6.1% (forecast: +2.5%), while in constant prices, they increased by 4.8% (expected: +1.5%). These strong economic indicators, which were quickly highlighted by the Finance Minister, likely supported the złoty. A robust consumer sector is generally inflationary, reinforcing the Polish central bank’s (NBP) outlook on further interest rate cuts.
This morning, Poland’s unemployment rate was in line with expectations, coming in at 5.4% for January. While this marks an increase from December’s reading of 5.1%, it is identical to the rate recorded in January 2024, suggesting seasonal labor market factors are at play.
Meanwhile, German economic data also matched forecasts, though that is the only silver lining. Germany’s GDP contracted by 0.2% quarter-on-quarter in the last period of the previous year, marking a full-year economic decline of the same magnitude. These figures may increase the likelihood of rate cuts by the European Central Bank (ECB) while also prompting fiscal policy changes from Germany’s new government in Berlin.
Adam Fuchs – Analyst at InternetowyKantor.pl
Source: Manager Plus
