Zloty Under Pressure Amid Cautious Mood, 1-Yr Basis Swaps Rise

EUR/PLN changes hands +67 pips at 4.6118, moving away from nearby support from the 20-EMA, which kicks in at 4.5878. On the flip side, the focus falls on Sep 12 high/round figure/61.8% retracement of the 2022 - 2023 downleg at 4.6971/4.7000/4.7072.

• PLN/EUR 1-year basis swaps have climbed by 8bp to to 149bp today, unwinding some of their 25bp decline registered between Sep 19-21. They are under the microscope since government officials flagged the option of tightening PLN liquidity should the currency continue to depreciate, which they did in October 2022. Spot EUR/PLN has eased from cyclical highs in response to verbal interventions but keeps refusing to enter the 4.40-4.60 range preferred by government officials.
• POLGB curve runs slightly flatter, with the 5-10 sector leading gains. The WIG20 Index has edged lower, printing its worst levels since May 31.