The EUR/PLN pair inched down in early trade from 3.96 at the opening and spent the rest of the session in a very tight range

The EUR/PLN pair inched down in early trade from 3.96 at the opening and spent the rest of the session in a very tight range around 3.95. In the morning the MPC’s Jan Czekaj came out for the second time in under 24 hours and reiterated that interest rates were at appropriate levels with inflation capped, among other things, by the strong zloty. He also added, that Poland’s healthy fundamentals should prevent the zloty from significant depreciation in the foreseeable future, which is a view shared by the majority of rate setters and analysts, including us.

In the early hours of trade today the zloty might get some upside from the bold 175 bp rate hike in Turkey although with domestic calendar empty in the end the unit should hold to the 3.93-3.96 range against the euro ahead of the ECB decision on rates which will get most of the attention. The expected rate hike should not influence the market but if the ECB hints on an acceleration in the current pace of monetary tightening we could see a negative reaction from emerging markets, the zloty in particular.

(CSOB - Investment research)