Weak week for the zloty (Afternoon analysis 25.09.2020)

The Polish currency has recorded one of the weakest weeks in recent months. The dollar is close to crossing another key level on its appreciation path - the EUR/USD quotes just above 1.16.

Friday afternoon passes with slightly better sentiment than the first phase of the day. The main market indexes in Europe, although still below yesterday's closing level, rebounded from today's lows, supported by growths on US markets. This has not resulted in a strong increase in risk aversion as in the previous days.

This is partly due to a virtually empty calendar of important events on Friday. However, the dollar is still in good condition, which was still improving in the afternoon. The main currency pair, i.e. the EUR/USD, fell very close to 1.16 (about 1.161) in the afternoon, and the last time the exchange rate was below this level was two months ago.

The weakness of the euro is also due to incoming information about the coronavirus, which indicates that the situation related to the pandemic is not yet under control in Europe. A renewed increase in restrictions in some European countries and a decrease in activity in services contributed to a marked fall in demand for the euro, and the dollar took advantage of this - reversing part of the strong appreciation of the common currency from the end of May to the end of August.

However, the dollar does not only strengthen significantly against the euro but also against most currencies. The US currency has been at its highest value against the Swiss franc for two months, and against the yen for nearly mid-September - currencies also seen as "safe havens".

In this situation, the zloty is not doing too well and is one of the weakest currencies of the emerging countries in the last week, when we have observed the appreciation of the dollar combined with an increase in risk aversion. The scale of the zloty's depreciation decreased today, but it has been losing value against the main currencies for another day in a row. The EUR/PLN exchange rate remains at around 4.55 and the USD/PLN at around 3.92 and is likely to remain unchanged by the end of the day due to an empty calendar of macroeconomic events.