Despite the heavy economic calendar the zloty traded broadly unchanged in the first hours of trade at 3.94 EUR/PLN on Wednesday. The MPC decision on rates usually would have been on top of the agenda, but given the recent unanimity within the Council it was pushed down the list by the GDP data and the MPC communiqué later in the day. The 1Q growth came in slightly above the market consensus (see more fixed income part) providing the zloty with support as bonds ignored the release. Consequently as the closing drew closer demand for the zloty reappeared, and the EUR/PLN returned to the lower bound of the current 3.93-3.98 range.
The MPC’s commentary turned out to be roughly balanced and had not major impact on the zloty. Just before the closing the zloty inched back to the 3.94 range partially in reaction to the NBP chairman Balcerowicz who said that the further firming of the zloty is now less likely due to the diminishing interest rate spreads and global risk aversion. At the same time however hawkish rate setter Dariusz Filar added, that emerging markets are not homogeneous and that Poland’s strong economic fundamentals should limit the negative impact of emerging market turmoil on the zloty. We share this view - the limited C/A imbalance, benign inflation outlook and robust growth are the main reason behind our end of year 3.85-3.90 EUR/PLN forecast.
(CSOB - Investment research)