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Weak zloty in 2016?

The beginning of the year is a period of prognoses for the next 12 months. What will be the value of zloty in the nearest time?

The Polish currently is becoming weaker and weaker from the half of last year. Right before the announcement of results of presidential election, the investors realized that there may be a radical change on the Polish political scene. In effect, the currencies became more expensive. From that moment, the value of euro increased by ca. 20 gr and the value of dollar – by over 30 gr. The Swiss franc, however, was stable in the last months of 2015 in comparison to zloty.

 

This year, the situation of the Polish currency may be similar to the one from the second half of 2015. In my opinion, zloty will be weaker in comparison to other currencies and it will sink – judges the analyst in Haitong Bank Kamil Stolarski during the talk with the news organization Newseria. There are several factors here: maintaining insecurity about decisions made by the Polish government and maintaining insecurity related to the potential engagement of the National Polish Bank in the program similar to the Polish LTRO (the support program of commercial banks aimed at decrease in prices of credits for enterprises – ed.).

 

The weak zloty will be unbeneficial from the point of view of e.g. importers. The situation of the Polish currency will translate into the fact that the investments will be more expensive and the living cost will increase. However, it will be possible to gain greater profit on Polish goods sold abroad. One of the crucial factor discussed by politicians of PIS is support of Polish export – points out Kamil Stolarski. It is the easiest way to support the Polish export by activities that weaken the currency. I think that if the currency suddenly became strengthened, the government and the National Polish Bank would have instruments that may weaken zloty in a very short period – adds Stolarski.

 

The exchange of the great majority of the members in the Monetary Policy Council will have an influence on the native currency market. The tenure of eight out of nine nominees to the Sejm, Senat and president will end at the turn of January and February. In June, the president of the National Polish Bank will be also exchanged. I expect that the discussion about new members of the Monetary Policy Council will remind the present discussion about members of the Constitutional Tribunal and it will turn out that political decisions are really crucial – says the analyst in Haitong Bank. Therefore, I forecast that the interest rates will be cut by a half percentage point at the beginning of the year – adds Stolarski.

 

According to the expert, the decrease in interest rates will be conducted in accordance with the current logics of taken decisions by the Monetary Policy Council. As Kamil Stolarski observes, new members of the Monetary Policy Council will abstain from deciding about reductions until the first prognosis about inflation prepared by the National Polish Bank. This decision will be made probably in March or at the beginning of the second quarter. It will happen in spite of the fact that the inflation will be increasing and the GDP growth pace will close to 4 per cent – says the expert.

 


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