The Polish zloty was volatile in early trade on Wednesday, but the data on superior wage growth combined with low inflation triggered an increasing interest in buying Polish assets. The opening of the session was at the levels of 3.8840 EUR/PLN and 3.2290 USD/PLN.
In the morning Poland’s lower house of parliament voted to sent for further works in a committee two proposals to launch a probe into the central bank’s supervision over the banking sector. The central bank governor Leszek Balcerowicz called the planned probe an abuse of the constitution. Later on, two rate setters expressed very different opinions about the last developments on the Polish FX market. On the one hand, Stanislaw Nieckarz of the MPC said that the zloty is mainly affected by global markets than the current political stand-off between the government and the central bank. From our perspective the latest evidence clearly indicates it. On the other hand Halina Wasilewska-Trenkner stated that Poland’s domestic politics are a source of growing risk to the zloty, inflation and financial markets. She also pointed out that freezing winter together with shaky domestic politics may have a negative impact on economic growth and particularly on investments in fixed assets.
We can agree on that, but simultaneously low temperatures substantially boosted consumption of electricity and hot water. The wage growth and inflation data (see more on them in the fixed income part) initiated strengthening of the PLN. The FinMin also informed investors that it didn’t conduct any FX transactions on the inter-bank market in February. With no domestic economic releases scheduled for today the market will be primarily driven by the global sentiment toward emerging markets, as the zloty has proven to be immune to the last days’ political developments.
(CSOB - Investment research)