PMI Indices Better Than Expected
If something good has to be said about the economic situation in the euro area, using the phrase “better than expected” would be right. A score of 44.4 points in the PMI indexes suggests a severe slowdown ahead. However, analysts were expecting a result of 44.2 points, so we’re doing better. Additionally, this is the best result since May, which sounds quite positive. The problem is that it isn’t. This is visible in the changes in the foreign exchange markets yesterday, where the dollar was strengthening dramatically against the euro.
Capital Outflow from Europe
Yesterday’s weakness of the euro against the dollar did not leave the Polish zloty unaffected. The euro rate jumped by almost three groszy that day, reaching a level of 4.37 PLN for the first time since November. Even greater changes were seen in the dollar exchange rate. It rose from 3.94 PLN to 3.99 PLN. However, here the rate is the highest only since the first half of December. The franc rate reached its highest level since October. Interestingly, both the Hungarian forint and the Czech crown resisted this trend. On the other hand, the Polish zloty was much stronger before and may be weakening after post-election enthusiasm.
Not Only the Currency Had a Weak Start to the Year
The Polish zloty is not the only one to have an unsuccessful start to the year. A quick glance at the Warsaw Stock Exchange shows that the Polish currency is not doing so badly. As of writing this article, the WIG20 is already down 3% from the start of the year. A broader index is down by 2%, suggesting that it is mostly foreign capital withdrawing, which usually invests in larger entities with high liquidity – such companies are of course in the WIG20. Problems are also visible in the debt market, where there is a clear increase in the profitability of Polish debt securities. This is not good news for the new finance minister. So far, we have been talking about amending the budget due to expenditure shifts and not increasing debt service costs.
There are no significant readings in today’s macroeconomic data calendar.
Maciej Przygórzewski – Chief analyst at InternetowyKantor.pl and Walutomat
