The EUR/USD, the major currency pair in the world, moved within the $1.4660-$1.4735 limits during the course of the week. The situation changed on Thursday after Ben Bernanke’s (Fed’s Chairman) speech at the Women in Housing and Finance and the Exchequer Club conference in Washington, who pointed that the American central bank will need to do all it can to avoid recession in the U.S. Such words raised expectations that the FOMC will cut interest rates by 50 basis points from the current 4.25%. The EUR/USD shoot over $1.48 reaching $1.4815. Due to the difficult situation of the U.S economy, the European Central and the Bank of England left interest rates unchanged at 4.00% and 5.50% respectively.

Since no macroeconomic reports were published in Poland, the polish currency followed global markets. Investors are looking for alternative forms of investment that can provide higher yields and such can be provided by the Złoty. Expectations of lower interest rates in the U.S and an interest rate hike in Poland is causing capital inflows to Poland. The Złoty is back on track to new highs against the euro and the dollar. During the course of the week, the USD/PLN declined from zł.2.4605 all the way to zł2.4170 while the EUR/PLN dropped from zł.3.6090 to zł.3.5790.

Adam Narczewski