The zloty retreated past 3.9750 EUR/PLN and ended Thursday’s choppy session in the 3.98 EUR/PLN area as markets in the region suffered from the rebounding dollar and as domestic politics continued to weigh negatively on the sentiment. On top of this markets were taken aback by comments from rate setter Halina Wasilewska-Trenkner early in the morning, who threatened that the lack of adequate fiscal prudence might have strong negative implications for the zloty and could lead to monetary tightening. The EUR/PLN came just short of 3.99 before edging back to 3.97 as exporters took the opportunity to capitalize on the zloty slide. The unit tried to push toward 4.00 EUR/PLN once more just before the closing but failed as well and eventually ended the day basically unchanged.
The PLN seems to be having a difficult time in the second half of the week. On the domestic front politics, and particularly the amount of uncertainty lingering around the 2007 budget and Zyta Gilowska’s vague political future all point to a (slightly) weaker zloty. However, even if pre-weekend position squaring pushes the zloty down today, 4.00 should still provide ample resistance for the EUR/PLN pair.
(CSOB - Investment research)