The market opened at 3.7880 EUR/PLN and 3.1390 USD/PLN and the currency turned to a strengthening mode just before the results of the bond tender were published, which indicated a very strong interest in Polish treasuries (see more on that in the fixed income part). The information that the government will keep the 2006 budget deficit unchanged at PLN 30.5 bn in its amendment to the bill to account for extra spending triggered this positive market reaction. The central bank governor Leszek Balcerowicz called amendment budget revenue plan “very ambitious”, but it passed through the market unnoticed.
The zloty hit its daily highs at 3.7630 EUR/PLN and through the rest of the day it followed a sideways pattern, weakening gently just before the closing. This weakening caused by a declaration of PiS leader Jaroslaw Kaczynski that without a durable and stable coalition within the parliament it is hard to govern the country and if such condition couldn’t be met there would be a need to call earlier elections. It happened after the opposition parties announced that they were starting to collect the votes to call off Marek Jurek from the position of the parliament speaker.
With no domestic economic releases on the horizon today, the zloty should be mainly focused on the Eurodollar movements. The currency can be also vulnerable to political developments.
(CSOB - Investment research)