Despite the roughly balanced and slightly less dovish than expected wording from the FED and the gently stronger US dollar the Polish zloty held its footing on Thursday morning and even managed to extend Wednesday’s gains later in the day as the relief for the greenback eventually turned out to be short lived. After a rather soft start of trade at 3.8370 the EUR/PLN pair quietly settled into the 3.82-3.83 range and held to it for the rest of the session. Nevertheless just near the closing the market was caught by a negative news from domestic politics.
Treasury Minister Wojciech Jasinski told parliament during a privatisation debate on Thursday that revenues from the sale of state assets were expected to reach just 3.1 bn PLN in 2006, down from an earlier target of 5.5 bn. This would imply just less FX inflows but probably higher bond supply on the domestic bond market. Hence as result, the EUR/PLN slipped to the 3.84 area during off-shore trading.
Not much action expected today on the domestic scene as well, with nothing except the money supply figures is expected. The Polish zloty might, however, suffer due to a contagion from Turkey as the TRY plunged on market worries that its huge C/A deficit could be a problem for the currency given continued selling pressure in core bond markets.
(CSOB - Investment research)