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PLN: FinMin Points To Impact On Exporters As EUR/PLN Tests Water Below 4.15

PLN
PolandCEEMEAEM BulletBulletEmerging Market News

EUR/PLN closed below 4.15 yesterday, seemingly triggering some alarm bells, as Finance Minister Domanski said that zloty strength is putting pressure on local exporters. His comments were circulated a couple of days after the CEO of Mlekovita, one of the largest Polish dairy producers, complained that zloty strength is reducing the competitiveness of exports and called on the NBP to reduce interest rates.

  • MPC's Kotecki said that in his view rate cuts could commence at the beginning of Q3 (and in September at the latest), and their scale this year could reach 50bp-100bp, although the upper end of this range would be difficult to achieve.
  • In the meantime, the prospect of a negotiated pause/end to the war in Ukraine has been supporting regional assets over the past few weeks. The WIG-Ukraine Index has soared by more than 80% just this year.
    • As a caveat, tensions between the US and Europe over how to handle future negotiations are coming to the surface, with Ukraine left out of the initial round of US-Russia negotiations hosted by Saudi Arabia.
  • This morning has brought a corrective rebound in EUR/PLN, with CE3 currencies generally trading on a softer footing compared with their EMEA peers.
  • EUR/PLN deals +64 pips at 4.1549. Bulls look for gains towards the next round figure (4.20) and the 50-EMA (4.2257), while the RSI remains in oversold territory. Initial support is at 4.1408, the 3.382 projection of the Nov 6 - 7 - 12 ‘24 price swing.
  • POLGB yields have inched higher and sit up to 4.6bp above neutral levels.
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EUR/PLN closed below 4.15 yesterday, seemingly triggering some alarm bells, as Finance Minister Domanski said that zloty strength is putting pressure on local exporters. His comments were circulated a couple of days after the CEO of Mlekovita, one of the largest Polish dairy producers, complained that zloty strength is reducing the competitiveness of exports and called on the NBP to reduce interest rates.

  • MPC's Kotecki said that in his view rate cuts could commence at the beginning of Q3 (and in September at the latest), and their scale this year could reach 50bp-100bp, although the upper end of this range would be difficult to achieve.
  • In the meantime, the prospect of a negotiated pause/end to the war in Ukraine has been supporting regional assets over the past few weeks. The WIG-Ukraine Index has soared by more than 80% just this year.
    • As a caveat, tensions between the US and Europe over how to handle future negotiations are coming to the surface, with Ukraine left out of the initial round of US-Russia negotiations hosted by Saudi Arabia.
  • This morning has brought a corrective rebound in EUR/PLN, with CE3 currencies generally trading on a softer footing compared with their EMEA peers.
  • EUR/PLN deals +64 pips at 4.1549. Bulls look for gains towards the next round figure (4.20) and the 50-EMA (4.2257), while the RSI remains in oversold territory. Initial support is at 4.1408, the 3.382 projection of the Nov 6 - 7 - 12 ‘24 price swing.
  • POLGB yields have inched higher and sit up to 4.6bp above neutral levels.