The Polish zloty soared past 4.10 EUR/PLN as press speculations on the resignation of finance minister Zyta Gilowska settled in early in the morning. By early afternoon, just before the FinMin was dismissed by the Prime Minister, the zloty reached a fresh 1 year low against the euro at 4.1270 EUR/PLN. Kazimierz Marcinkiewicz immediately named a new candidate for the post though and gave the zloty a helping hand reassuring markets that the government’s current economic policy would remain intact. Before the day was over the zloty recouped most of the losses and ended the day below the critical 4.1 EUR/PLN mark.
The market’s initial reaction to the FinMin story was not as negative as could have been expected - the zloty regained composure thanks largely to the swift nomination of the thoroughly competent, but also completely unknown Wojciechowski to the FinMin post. The market’s main concern is that new minister lacks the needed political background and could find it hard to resist the populist’s demands to boost spending. These fears should keep the PLN under pressure today.
(CSOB - Investment research)