The Polish currency inched lower just after the opening on Tuesday, extending recent losses due to increased risk of snap elections. The market opened at 3.8850 EUR/PLN and 3.2020 USD/PLN and within the next two hours the unit lost almost 0.5% against major currencies. The zloty failed to cross the key resistance level of 3.90 EUR/PLN despite statements by the Samoobrona’s leader Andrzej Lepper that chances of forming a stable coalition are rather thin. Lepper was against the participation in the government by another peasant’s party – the PSL. From our concern it can make achieving a compromise more difficult, but it is hard to guest, whether or not the Samoobrona is simply raising the stakes ahead of the coalition negotiations. Lepper also called the PiS leader Jaroslaw Kaczynski to become the PM to avoid steering of the government from a back seat. The Samoobrona would be interested in getting the ministerial seats in the ministries of social affairs, agriculture, environment protection, economy and interior affairs.
Obviously such demands cannot be met and we treat them as a starting point for future negotiations. Later in the day Jaroslaw Kaczynski dismissed speculations that PM Kazimierz Marcinkiewicz will resign if the dissolution motion fails to get the needed support in parliament. Unexpectedly just before the closing a second wave of weakening took place. We expect that politics will come back to the center of market attention today, as the parliament session begins. It is hard to definitely judge, whether a compromise between the PiS and the fringe groups will be achieved, but believe that in the end the conservative cabinet will strike a power-sharing deal with the smaller parties.
ČSOB Investment Research