The Polish zloty staged a gentle recovery along with other CE4 currencies on Thursday morning, after having ended three consecutive days in the red earlier this week. Nonetheless the rebound, which saw the EUR/PLN edge back to the 3.87 area, turned out to be short-lived. Luck switched hands later in the afternoon and the euro gained beck some ground against the zloty, which has been weighed down since the beginning of the week by anxiety in the market about the possibility of earlier elections and the ongoing conflict between the ruling conservatives and the NBP chairman Leszek Balcerowicz.
Given the lingering political uncertainty and the soft performance of all the currencies in the region in recent days the nature of the rebound on Thursday should be treated as purely technical. We believe that market moods are likely to remain gloomy at least until the first batch of eco data is released early next week. Hence we see some room for the zloty to weaken although we uphold our view that it should be met with strong offers in the 3.90-3.91 EUR/PLN area.
ČSOB - Investment research