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Polish zloty strengthens despite weak data, Warsaw Stock Exchange attracts new capital

INVESTINGPolish zloty strengthens despite weak data, Warsaw Stock Exchange attracts new capital

The dollar is strengthening in the market. According to preliminary data, the Polish economy is finishing its second-worst year in a while. Despite this, the Polish zloty strengthens, and the stock exchange attracts new capital.

US news did not surprise

Yesterday it turned out that there will be no change in interest rates overseas – this was almost certain. As much as anything in the market can be certain. However, analysts drew attention to the fact that the appearance after the decision itself will be the most important part of the meeting. There was, of course, assurance about not raising interest rates further, which was an absolute matter of course. However, the somewhat enigmatic phrase about waiting until they are sure that inflation permanently heads towards 2% has reappeared. There is (to put it mildly) an open door. Such a conviction by the FED can be obtained at any time. However, it indicates that the decision will depend on economic data. The latest GDP data were indeed good, so there are no problems here. However, if the economy was going worse, one should prepare that they would take advantage of the statement on the steady pursuit of inflation by 2 percent.

US Data

Yesterday was dictated by the information from the USA. First, we learned the ADP Report on employment. 107 thousand is not only a result sharply worse than expected at 145 thousand level. This is also the third worst result within a year. Investors in the US are much more sensitive to employment data, which is clear from the market reaction. The sell-off of the dollar began. An hour and a half later, fuel for this movement was added by the Chicago PMI Index. It turned out to be weaker than expected, thus only intensifying the movement. However, the day ended with a strengthening of the US currency against the euro due to the above-mentioned decision of the Federal Reserve. Putting off expected interest rate cuts in March means that the dollar will pay higher interest for a longer time; therefore, it is more attractive to investors.

Polish economy slowing down

Preliminary data on GDP growth in Poland show that it is worse than thought. GDP growth was expected at 0.5% annually. However, preliminary data showed 0.2% growth. It would be the worst result of our economy, excluding the pandemic year. However, the market completely ignored this data. Moreover, the Polish currency was gaining noticeably yesterday. The decent reading of the BIEC labor market index helped a bit in this. The strength of the movement, however, shows that there must be something more to it. Yesterday, capital had a big appetite for risk, which can also be seen on the stock exchange, where we had significant increases. This effect could also be seen in other emerging economies.

Maciej Przygórzewski – chief analyst at and

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