Fitch, as the agency upgraded Poland long term debt rating from BBB+ to A- on Thursday. The EUR/PLN surged down by roughly 0.5% in a knee-jerk move, before flattening out in the 3.8550 area as the trading day drew to an end.
Our view: Looking back, the major (if not the only) surprise regarding the agency’s decision was its timing. Poland’s ratings have long been the among the lowest in the region, standing evidently in contrast with the healthy economic fundamentals (robust growth, low inflation, healthy external position) and strong fiscal performance over the last years. As such, even though the timing came in as a complete surprise the upgrade itself had been half expected at some point in time, especially given the positive rating outlook. That is one reason we should not see the PLN rally off at this point – especially since the strong fundamentals were already there for all to see.