The zloty index by Cinkciarz.pl. October 2015. Part 1

Even though the zloty had another increase in September, the scale of the Polish currency's enforcement was relatively small. The zloty only gained significantly to the EME and CEE countries.

In September, the zloty extended a series of increases which started in July. However, the scale of enforcement on the Polish currency was relatively small. In the case of the MAJ_33 index it was only 0.2%. On the other hand, the zloty weakened to the Scandinavian currencies and recorded another month of decreases to the currencies of CEE_NO_CR countries.

In contrast with the month before, the Russian rouble stabilised in September which translated to the Zloty's Index. It is because the contribution of Russia in the Polish foreign trade is very significant. The Russian currency took advantage of a stop in a decrease in the oil price. However, it is difficult to estimate whether the situation on the market of raw materials has changed so significantly that the Russian economy may experience a symbolic improvement in the nearest perspective. Because of this the rouble's enforcement may be short, and the Zloty's Index may return to the stronger increases, especially to currencies from the region.

During the past twelve months, the nominal rate of the zloty increased to the majority of groups of countries observed by Cinkciarz.pl. The price competitiveness improved in year on year relation only in two cases. These were the CEE_NO_CR and EME_NO_CR indexes. The CEE index is currently by 20.6% higher than one year ago. In the case of real indexes we are dealing with the stabilisation of the zloty after a wear off in the past few months.

Recently, the Polish currency is doing clearly worse. The reason is an economic slowdown, which was signalised by data about industrial production and retail sales. The PMI index for industry also showed a lower pace of development. In such circumstances there is a bigger probability of starting a discussion about a decrease in interest rates. This scenario may mean a wear off on the zloty in the nearest perspective.

According to expectations, during September's meeting the Federal Open Market Committee decided to leave the interest rates at their current level. This means that the Federal Reserve continues the policy of zero interest rates. Current market expectations assume that the Fed will raise the cost of credit during the meeting in December. Nevertheless, the Fed chairwoman Janet Yellen clearly indicated that the American central bank will raise the interest rates by the end of 2015.

Despite leaving the American interest rates on a record low level, the atmosphere on the financial markets is quite disadvantageous. This is a certain surprise because a loose policy from the Fed is a factor that until now supported the appetite for risk. Tightening of the monetary policy is one of the crucial factors impacting the currencies of the emerging countries. This matter is further discussed in October's report.

Summary: Cinkciarz.pl Indexes and the changes of indexes

Chart: Value of the nominal index. Data: Cinkciarz.pl

Chart: Change of the nominal index month on month (in percent). Data: Cinkciarz.pl

Chart: Change of the nominal index month to month (in percent). Data: Cinkciarz.pl

Chart: Value of the real index. Data: Cinkciarz.pl

Chart: Change of the real index year on year (in percent). Data: Cinkciarz.pl

Chart: Change of the real index month on month (in percent). Data: Cinkciarz.pl

Chart: Change of export month on month (in percent). Data: GUS; Analysis: Cinkciarz.pl

Chart: Contribution of the basket in general export (in percent). Data: GUS; Analysis: Cinkciarz.pl

Chart: Share of the basket in overall export (in percent) Data: GUS; Description: Cinkciarz.pl

Content of the currency baskets

Chart: Content of baskets of the countries. Source: Cinkciarz.pl