The market is having a moment of calm and the zloty is regaining some of its losses. The euro rate is once again falling below 4.30 zloty. However, considering the events anticipated this week, the question arises: for how long? In the background is a rise in inflation in the Czech Republic and peaks in the gold market.
Euro below 4.30 zloty
The zloty’s strengthening trend which began yesterday halted at a level of 4.30 zloty. However, today the rate broke below this important psychological level. Why is the zloty strengthening? Market stabilization is aiding the Polish currency. This can be seen in the main global currency pair that, except for a brief spike, has been moving within a very narrow range for a week. The market is awaiting information on the situation in the Middle East and inflation data from the U.S. Investors are seemingly concluding that the recent devaluation of the zloty was excessive and needs adjusting. Inflation data is due tomorrow, and a new round of peace talks is scheduled for Thursday. It appears that much will be cleared up by the end of the week. We’ll see if this strengthening is only a transient movement or if we’ll fall below the psychological barrier of 4.30 zloty per euro once more.
Inflation increase in the Czech Republic
Yesterday, quite unexpectedly, we saw a rise in inflation in our southern neighbors. Prices jumped from the anticipated 2% to 2.2%. Interestingly, the 2% rate seems to be suspiciously common there. We also watched an exact 2% in February and March. The inflation surge compared to the previous month and expectations was immediately visible in the Czech crown chart. Its strength against the euro increased instantaneously after the data publication. This is presumably due to expectations of a slowdown in the interest rate cut cycle. On the other hand, the Czechs began their reductions later than Poland but didn’t pause during the elections, as we did. As a result, the primary interest rate decreased from a level of 0.25% higher than Poland’s initially, to a current level of 1.25% lower than ours. This, of course, translates to noticeably cheaper credit.
Gold brushes off all-time record
Yesterday, we witnessed a sharp upturn in gold prices. Why were investors buying this precious metal on Monday? There are two main reasons for this movement. The first is geopolitical tension in the Middle East. Gold has always been considered a good investment during turbulent times. The second reason is the anticipation of Wednesday’s inflation data from the U.S. Some analysts note that if there were indeed sudden, large decreases in interest rates across the Atlantic, it could sharply withdraw capital from bonds and deposits in favor of investments independent of the interest rate. Additionally, in the context of rising unemployment, gold seems to be an interesting solution, especially for pessimists.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
Source: https://managerplus.pl/zloty-odbija-euro-slabnie-co-dalej-z-kursem-92792
