The Polish zloty traded in an extremely tight
range between 3.81 and 3.82 EUR/PLN
throughout the session on Tuesday as most
players held to the sidelines ahead of the
Fed rate decision later in the evening. The
marginally softer Fed statement had no
impact on the zloty as if to confirm that the
dull pre-holiday trading conditions may have
already settled in for good. If this were to
be the case the zloty could in the end find
it difficult to battle its way past EUR/PLN
3.80 before the year-end, which would
obviously put our 3.7750 target out of reach
for now.
Late in the evening Lech Kaczynski
announced that he had proposed economics
professor and former advisor to subsequent
NBP presidents Jan Sulmicki from the
Warsaw School of Economics to be the new
central bank governor. Most, if not all
observers were taken by surprise by this
since Sulmicki has never been mentioned as
a potential candidate. Nonetheless markets
should not react to the nomination just yet
simply because so little is known about the
new NBP president. One of Sulmicki’s past
co-workers has mentioned that he would
most likely follow in the footsteps on Leszek
Balcerowicz and maintain a firm stance on
fighting inflation, which would no doubt be
good news for the zloty. This does seem to
be a reasonable assumption for the time
being, but the market will be looking very
intently for any comments from Sulmicki
himself in the coming days, which could help
verify this judgment.
The current account data due out at 1430
GMT will be the highlight of the session
today. Poland was a net contributor to the
common budget last month, for the first time
since February and we expect a visible yet
most likely one-off deterioration in the
current account in October. Regarding the
market reaction the bottom line is that
the report has not been a market mover
for quite some time now as data quality
remains a major issue. On top of this our
expectations regarding both the C/A and
trade balance are not really materially
different from the market consensus (EUR -
270 m and -130 m respectively) so we would
be surprised by an outspoken negative
reaction from the PLN.
ČSOB Investment research