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PLN: Zloty, Polish Stocks Continue To Garner Strength

PLN
PolandCEEMEAEM BulletBulletEmerging Market News

Selling pressure persisted as EUR/PLN printed a new cyclical low at 4.1671 this morning before recovering to 4.1735. The RSI is making a foray into oversold territory again, albeit it has been relatively shallow so far, with the lower Bollinger band intact. Continued gradual PLN appreciation could take the pair through 4.1664, the 3.000 projection of the Nov 6 - 7 - 12 ‘24 price swing, flagged by our technical analyst as next support of note.

  • A significant beat in Hungary's January CPI yesterday may have supported regional FX by fuelling concerns over regional price dynamics. Furthermore, anecdotally, it seems that talk of a potential start of ceasefire talks between Russia and Ukraine has been lending support to CE3 currencies. Ukrainian President Zelensky yesterday floated the idea of making territorial swaps part of the future negotiations. Market participants will be monitoring this weekend's Munich Security Conference (MSC) in case it brings any fresh announcements on that front.
  • Meanwhile, dovish signals on medium-term monetary policy outlook have failed to derail zloty appreciation, presumably because the market already prices a recommencement of NBP easing later this year. 9x12 FRA/3-month WIBOR spread last sits at ~87bp despite Governor Glapinski's hawkish rhetoric.
    • Climate and Environment Minister Hennig-Kloska yesterday said that the government will decide on a potential extension of electricity price cap based on updated tariff levels, expected to be announced in April. Most sell-side desks interpreted it as supportive of the view that, contrary to the NBP's forecast, electricity prices should not boost inflation in 4Q25.
    • Data from Statistics Poland showed that wage growth in 4Q24 was slower than assumed by the NBP in its latest projection (+12.4% Y/Y vs. +13.7%), which comes on the heels of a below-forecast Q3 reading. The quarterly data cover employees in the entire national economy, as opposed to monthly releases, which usually get wider airing, but cover only workers from private-sector enterprises with over 9 employees.
  • POLGB yields have pulled back from highs but remain marginally above neutral levels. The Finance Ministry will sell PLN6bn-10bn worth of debt today, raising the lower end of that band from PLN5bn, which is indicative of expections of slightly higher buyer interest.
  • The WIG Index continues to advance, adding a further 1.1% today (YtD +15.6%), in what has been a very strong start to the year for Polish stocks. The WIG20 Index sits 1.2% higher on the session (YtD +17.0%).
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Selling pressure persisted as EUR/PLN printed a new cyclical low at 4.1671 this morning before recovering to 4.1735. The RSI is making a foray into oversold territory again, albeit it has been relatively shallow so far, with the lower Bollinger band intact. Continued gradual PLN appreciation could take the pair through 4.1664, the 3.000 projection of the Nov 6 - 7 - 12 ‘24 price swing, flagged by our technical analyst as next support of note.

  • A significant beat in Hungary's January CPI yesterday may have supported regional FX by fuelling concerns over regional price dynamics. Furthermore, anecdotally, it seems that talk of a potential start of ceasefire talks between Russia and Ukraine has been lending support to CE3 currencies. Ukrainian President Zelensky yesterday floated the idea of making territorial swaps part of the future negotiations. Market participants will be monitoring this weekend's Munich Security Conference (MSC) in case it brings any fresh announcements on that front.
  • Meanwhile, dovish signals on medium-term monetary policy outlook have failed to derail zloty appreciation, presumably because the market already prices a recommencement of NBP easing later this year. 9x12 FRA/3-month WIBOR spread last sits at ~87bp despite Governor Glapinski's hawkish rhetoric.
    • Climate and Environment Minister Hennig-Kloska yesterday said that the government will decide on a potential extension of electricity price cap based on updated tariff levels, expected to be announced in April. Most sell-side desks interpreted it as supportive of the view that, contrary to the NBP's forecast, electricity prices should not boost inflation in 4Q25.
    • Data from Statistics Poland showed that wage growth in 4Q24 was slower than assumed by the NBP in its latest projection (+12.4% Y/Y vs. +13.7%), which comes on the heels of a below-forecast Q3 reading. The quarterly data cover employees in the entire national economy, as opposed to monthly releases, which usually get wider airing, but cover only workers from private-sector enterprises with over 9 employees.
  • POLGB yields have pulled back from highs but remain marginally above neutral levels. The Finance Ministry will sell PLN6bn-10bn worth of debt today, raising the lower end of that band from PLN5bn, which is indicative of expections of slightly higher buyer interest.
  • The WIG Index continues to advance, adding a further 1.1% today (YtD +15.6%), in what has been a very strong start to the year for Polish stocks. The WIG20 Index sits 1.2% higher on the session (YtD +17.0%).