September - not a favourable time for the zloty (Afternoon analysis 24.09.2020)

The zloty is one of the weakest currencies of emerging countries during Thursday afternoon. The dollar stabilizes against the euro around yesterday's closing level, about 1.1650, which may also protect the zloty from deepening the falls later in the day.

The dollar is still in good condition, but strong appreciation has been halted for now

Thursday became a day when the zloty's weakening scale was enlarged. In the afternoon, it was one of the weakest currencies of emerging countries (EM). The zloty lost about 1% to the dollar, the euro, the franc and the pound, while at the same time setting several week-long records of weakness.

The EUR/PLN exchange rate rose to more than 4.56 in the afternoon, cancelling all the appreciation of the Polish currency against the euro, which we have observed since mid-May. On the other hand, the CHF/PLN exchange rate rose to about 4.228, reaching its highest level since the second half of May, the USD/PLN exchange rate moved to its highest level since the second part of July (3.92), and the GBP/PLN pair again approached 5.00 in the afternoon (about 4.986 - the highest since September 7th).

So far this month has not been favourable for the zloty. The zloty lost nearly 3.6% to the euro, 5.8% to the dollar, 3.4% to the Swiss franc and 1.1% to the pound (being one of the few emerging countries' currencies to have lost to the British currency at all during this period).

Although the zloty is among the weakest EM this afternoon, the likelihood of a significant deepening of the depreciation later on seems limited for the moment. Two hours after the start of trading on the New York Stock Exchange, the quotations of the main currency pair, i.e. the EUR/USD, oscillated around yesterday's closing level, i.e. around 1.1650.

Looking at the US currency a little more widely, the Bloomberg dollar index (which also includes EM currencies) also moved around yesterday's closing level this afternoon. Therefore, the dollar is stronger in the context of recent days, but the demand pressure on it has not yet increased in the afternoon, which may protect, among others, the zloty from further losses.