The Polish zloty remained locked in a tight range between 3.96 and 3.9750 EUR/PLN as emerging markets took a breather on US Labor Day. Domestic politics took to the backstage as well after an eventful weekend even though details on the budget act were released by the Finance Ministry (see more in the fixed income part). With foreign players on leave and the assumptions basically in-line with expectations the news had no discernable impact on the zloty though.
The budget is up for approval in the government today, so we could see increased nervousness as US players return to the market. Nonetheless 3.9750 EUR/PLN has proven a sound barrier for the zloty in recent days and it would most likely take more than just the usual coalition scuffles to push the zloty lower against the euro. However if the level is broken nothing should stand on the way to 4.0 EUR/PLN, where equally strong resistance can be expected.
(CSOB - Investment research)