The Polish zloty recovered a significant part of losses that have occurred since the beginning of the summer holidays when the PLN depreciated. As a result, the zloty weakened in relation to the dollar to levels not observed since the beginning of 2017, and to the euro from mid-2018.
At the end of September, the depreciation of the Polish currency was stopped and the zloty gained almost as much as it lost in the described period. The strength of the return from around 4.02 per dollar and 4.40 per euro seems quite large, which seems to suggest a significant counterattack of PLN buyers. It seems that stable monetary policy in Poland, along with its easing in other countries, may support the zloty. In addition, the global economy, including the European one, seems to be recovering, and the period of deepening negative data may slowly end.
If the worst data is behind us, it may be conducive to improving the results of both the global and European economies, which could also have a positive impact on emerging markets, i.e. also Poland, alleviating the slowdown in the country. According to the latest economic forecasts of the International Monetary Fund, Poland's GDP is expected to reach 4.0 percent in 2019 against the spring forecast of 3.8 percent
For three weeks the zloty has been weakening against the dollar and the euro. Nevertheless, this seems to be only a rebound after earlier strengthening, not an important turnaround. Therefore, it seems that the trend strengthening the Polish currency has not yet ended, but has only been interrupted by the correction. For USD/PLN the significant resistance may be around 3.90 and 3.94, while for EUR/PLN 4.31 and 4.34. In turn, an important place of support seems to be for USD/PLN at 3.80, and for EUR/PLN it could be located in the area of 4.23-4.24.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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