The zloty held to an extremely tight range
around EUR/PLN 3.81 in what must have
been one of the most dull and least volatile
trading sessions in weeks. With not data on
the domestic agenda to look to, the updated
EC convergence report caught some
attention, but since it was anything but
revolutionary, it had no discernable impact o
the market.
The Commission once again
stressed that even though Poland had one
of the three lowest inflation rates in the
enlarged EU and long term interest rates
had dropped below the Maastricht reference
value, it was still far from fulfilling all the
Eurozone entry criteria. As before the main
problem remains the excessive budget
deficit, which the EC sees at just under 4%
of GDP in 2009, far above the sub 3.0%
mark written into the updated convergence
program prepared recently by the Polish
Finance Ministry. The Commission
disregarded the Polish estimates and
stressed that there was no reason to lift the
EDP procedure for Poland. Even though the
EC deficit forecasts do seem a bit on the
high side we have heard similar wording
from the European officials repeatedly in
recent weeks so such comments are more
and more becoming a non-event, especially
since the ruling conservatives obviously still
plan to stay out of the EMU for as long as
possible, rather than to enter unprepared. In
this respect, also the idea of Poland
potentially holding a referendum on the euro
entry sill causes some irritation with EU
policy makers.
The domestic calendar doesn’t liven up yet,
with only the 2Y T-bond tender on the
agenda, so we should be up for yet another
calm, range-bound session for the zloty
today.
ČSOB Investment Research