The Polish zloty initiated the trading with an upbeat trend on Friday

The Polish zloty initiated the trading with an upbeat trend on Friday, on the back of new perspectives for fiscal consolidation that were drafted a day earlier by the finance minister Zyta Gilowska. The session opened at 3.9750 EUR/PLN and 3.2560 USD/PLN and within the next two hours the unit recorded gains of around 0.5% against the euro. The comment of the PiS leader Jaroslaw Kaczynski that the Civic Platform made it clear that it does not have a coalition proposal for the PiS, and indicated the necessity to search for other coalition partners, had almost no impact on the market. From our perspective it opened the door for starting formal negotiations of the PiS with the Samoobrona and PSL. On Saturday the Political Council of the Kaczynski’s party made a decision to go for such a solution. Till the end of the session on Friday the zloty hovered in a tight range just above 3.9500 EUR/PLN.

We think the Polish zloty will remain vulnerable to political developments – particularly the wording of the Samoobrona’s leader Andrzej Lepper. The most interesting question from financial markets perspective is to which extent his language will converge toward a moderate and tolerable one, once he scents the perspective of entering the government (possibly as deputy PM).

(CSOB - Investment research)