The Polish zloty held to the tight 3.80-3.81 EUR/PLN range throughout most of the calm session on Monday as the market’s attention shifted away from politics and the rich eco calendar came into focus. Investors were unnerved by the FinMin’s announcement that the government would exercise caution, when performing market operations in the future – a far from surprising statement given the PM’s clear stance on the issue, although clearly in contrast with recent declarations concerning the possibility of FX market “interventions” following the EUR 3 bn Eurobond issue later this month. The zloty did not respond to doubts concerning the potential PiS – Self Defense coalition expressed by the new finance minister Zyta Gilowska. The ex-PO leader admitted that such an agreement, although rather unlikely, would put her in an awkward position and we believe could force the newly appointed deputy PM to resign. The better-than-expected inflation figures and unexpectedly deep drop in wage dynamics had relatively little impact on the market. The zloty eventually ended the day at 3.8000 EUR/PLN. Politics will remain the key source of inspiration for the zloty today, with the postponed meeting between president Lech Kaczyński and PO leaders (originally planned to take place on Monday) and coalition talks between PiS and Self-Defence in the center attention. Tensions between PiS and the conservatives remain elevated though which will probably prevent the two parties from reaching an agreement anytime soon. Barring potential developments within the dynamic political environment today’s session will be rather eventless, although we should probably see an increase in activity as American players return to the marketplace.
(CSOB - Investment research)