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Poland Will Do 'Everything' To Make The Zloty 'Slightly' Stronger

POLAND
  • Selling pressure on PLN has been elevated in recent weeks amid rising political and economic uncertainty in Poland.
  • In addition to the Covid uncertainty (which may lead to significant downward revision in growth expectations), there are a number of risks in Poland that can impact the zloty in the medium term:
    • on-going dispute with the EU,
    • fines and delay in pandemic aid,
    • FX-loan settlements,
    • rising LT bond yields.
  • PM Mateusz Morawiecki mentioned in a press conference this morning that Poland will do 'everything in its communication and actions' to make the zloty 'slightly' stronger.
  • The aggressive rate hikes by the NBP in the past two months was not enough to limit the downside risk on PLN, and rising uncertainty could continue to push preference for 'safe' assets (i.e. USD) in the near term.
  • Unless we see a correction in the US Dollar, selling pressure on PLN is expected to remain elevated.
  • PLN is up slightly following PM Morawiecki's comments, with USDPLN testing its 4.16 support. Next level to watch on the downside stands at 4.14. On the topside, resistance to watch stands at 4.20.

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