Local Desks Take Note Of Continued Zloty Appreciation, Point To Strong Fundamentals

Zloty strength comes to the fore in daily commentary from local sell-side desks, with at least several of them mentioning it in the titles of their notes amid the absence of notable event risk.

• ING note that EUR/PLN showed at new YtD troughs (4.26) as the zloty drew support from both the NBP's anti-cut rhetoric rhetoric from last week and a weaker greenback. They expect a pause in EUR/PLN declines for at least a day or two and do not rule out a correction, but this would require EUR/USD depreciation as domestic fundamentals remain strong. They still expect EUR/PLN to fall towards 4.20 in 2Q2024, albeit Donald Trump's potential victory in the US presidential election remains the key risk for CEE currencies in 2H2024.
• Pekao write that EUR/PLN fell significantly to 4.26 despite no catalysts in the local macro calendar, which opens up scope for a continued move south towards the round figure of 4.20. USD/PLN approached 3.9250, edging towards 3.90. Positive sentiment was also evident in the local stock market, with WIG20 closing above 2,500 for the first time since 2018.
• Santander note that EUR/PLN "almost" touched 4.25, with the zloty drawing support from the imminent inflow of EU funds in mid-April (the first tranche of post-COVID aid is around PLN6bn, some of which may be exchanged in the market). Growing market rates may be providing additional support to the zloty.