Despite the generally applicable Betteridge’s law, which states that questions posed in headlines are typically answered in the negative, the Polish currency appears to be losing its favorable treatment from the post-election period.
End of Preferential Rates for Zloty
Following the parliamentary elections, the Polish currency experienced a noticeable appreciation. This upward trend peaked around mid-December, coinciding with the inauguration of the new government. At that time, the euro exchange rate dipped below 4.30 PLN, while the US dollar exchange rate fell to below 3.90 PLN. However, since then, enthusiasm for the Zloty has waned. A clear shift in sentiment is evident. Consequently, the euro now surpasses 4.40 PLN, and the dollar has breached the 4.05 PLN mark. Some analysts attribute this decline to the challenges of governing in the current politically charged climate. On the other hand, profit realization often follows periods of strong currency movements, and this may be the case here. It’s important to keep in mind that the diminishing interest rate cuts continue to support the Zloty. If upcoming cuts were factored in, the Zloty would be further weakened.
Core Inflation
Aside from the standard inflation basket, other measures are also published. One such measure is core inflation, which is determined by subtracting food and energy price changes. During the surge in energy commodity prices, this index consistently showed lower results compared to consumer inflation. However, this situation reversed dramatically when oil and gas prices corrected downwards due to the fluctuations triggered by Russia’s invasion of Ukraine. Currently, core inflation stands at 6.9%, just 0.7% higher than consumer inflation. This is one reason analysts expect a slowdown in disinflation this year. The reasoning is that commodity price reductions cannot continue indefinitely.
Inflation Growth in Canada
While many countries effectively manage inflation, instances of rebounds in the wrong direction after rapid drops are not uncommon, as evidenced by the current situation in Canada. Yesterday’s published data revealed a rise in the inflation rate from 3.1% to 3.4%, following two consecutive months of decline. Analysts had anticipated an increase, but not to this extent. It’s worth noting that this is the second time inflation has rebounded after hitting lows. In June of this year, inflation reached a level of 2.8% only to reverse course upward again.
Today’s Macroeconomic Data Calendar:
14:30 – US – Retail Sales Results
15:15 – US – Industrial Production
20:00 – US – Beige Book
Maciej Przygorzewski – Chief Analyst at InternetowyKantor.pl and Walutomat.pl
