Tthe Polish zloty slipped to the new lows on Friday

Despite improving short term political outlook the Polish zloty slipped to the new lows on Friday on the back of global repositioning in investment assets. The market opened at 3.8725 EUR/PLN and 3.2491 USD/PLN and just after the opening, it seemed that the currency started recovering last day losses, once it became clear that the risk of snap parliamentary elections was substantially reduced. Day earlier the parties that had sealed so called “stabilization pact” agreed to keep it alive. However, perspectives of more aggressive global monetary tightening triggered withdrawing of capital from all emerging markets including Poland. It sent the zloty to the three-months low at 3.9110 EUR/PLN, breaking the key resistance level at 3.90 EUR/PLN.

Poland's ruling conservatives called for a parliamentary probe into banking supervision on Sunday, that directly refers UniCredito's takeover plans in Poland. They want to put the central bank governor Leszek Balcerowicz in front of a special state tribunal which could lead to his dismissal, as they accuse him for disobeying legal procedures. It is worth reminding that Balcerowicz excluded vice-minister of finance Cezary Mech from the meeting of the banking supervisory commission’s on Wednesday, which triggered a conflict between the central bank and the government.. Having gi ven healthy economic fundamentals the currently weak levels of the zloty should boost more interest in buying Polish assets.

We also don’t expect that putting Balcerowicz in front of the tribunal, may lead to a further substantial weakening of the zloty, as this currency has proven recently to be immune to this type of disturbances. The major source of risk remains continuation of globally negative sentiment toward emerging markets.

(CSOB - Investment research)