USDPLN went up from Monday’s bottom of 3,45 to 3,65. While the week ended with some profit taking, the volatility was still extraordinary and not justified by relatively calm markets of major currency pairs. Looking at the unnamed graph one would think about a budget or banking crisis in the country, yet nothing of that sort has happened of course. Even after week-ending profit taking the zloty is still down 25% to the dollar and around 20% to the euro in just a month. Looking at the latest dynamics one notes a hyperbolic changes which often occur in the most speculative periods and often precede some sharp correction. With heavy earnings on accounts of those who did bet against the zloty, the correction is likely to happen, however it is still too early to anticipate a change in the trend. This one would require more risk appetite among global investors and we can clearly see that it is rather distant, not only on a currency market but also on commodity, stock and credit markets.
Sharp depreciation of the Polish currency not backed by changes in fundamentals sparked a discussion about a currency intervention. It is not likely to happen. First of all, the situation on the market is broader and affects not only the Polish zloty, which would render an intervention unlikely to bring satisfactory results. Secondly, the central bank would put its credibility at risk even before entering the ERM2 mechanism.
|
Przemyslaw Kwiecien  |
 |
