The euro, supported by the European Central Bank, continues its appreciative move, leaving the increasingly weakening dollar in the background. The zloty is again the weakest in the group of emerging countries' currencies.
Optimism in the market protects the zloty from a greater depreciation
Today, the zloty's quotations reflect what happened yesterday - during the same hours, the Polish currency was the weakest in the group of emerging countries (according to Bloomberg data), it also lost in relation to the Swiss franc, the dollar and the euro.
This is happening at a time of strong market optimism: gaining risky asset classes, a significant weakening of the dollar and a strengthening of the euro. These are conditions that should support the zloty. The fact that this is not the case now indicates the internal weakness of the Polish currency during today's quotations. In part, it may be a response to its value increases which we have observed since mid-May, slightly strengthened by the fact that the NBP has unexpectedly cut interest rates.
If the sentiment on the market worsened slightly, the internal weakness of the zloty could deepen its depreciation from current levels (the EUR/PLN pair is approx. 4.46, the USD/PLN pair is about 3.93). And the potential for sentiment change for the worse seems to be increasing. Apart from strong growths on equity markets, the sharp weakening of the dollar and the simultaneous strengthening of the euro may be slowly being over.
The longest upward trend since 2011
The euro has been gaining for the 11th day in a row against the dollar. This is the longest day-after-day increase since 2011. It is supported by an increase in the stimulus package by the European Central Bank.
The rapid appreciation of the euro and the simultaneous weakening of the dollar is shown by the fact that as early as last Monday, the EUR/USD exchange rate was even below 1.09. Today, the exchange rate of the main currency pair came close to 1.14 in the morning. A similar story was observed at the turn of February and March, when the EUR/USD exchange rate rose from about 1.08 just below 1.15, to drop sharply to 1.06 within a week and a half.
A repetition of such a decline would currently require a strong trend or a series of negative information. However, even a return of EUR/USD to around 1.10, given the internal weakness of the zloty basket, could increase the supply pressure on the Polish currency.