Fed’s Chairman confirmed that the situation on the financial markets remains tough and the Fed will take all necessary steps to avoid recession. The interpretation of those words is simple – the FOMC will cut interest rates on their March meeting probably by 50 basis points to 2.50%. Such perspectives lifted the EUR/USD to $1.4670 on Friday while it was still quoted at $1.4495 at the beginning of the week.

The Polish Złoty gained on the weakness of the dollar but other factors also influenced the national currency. Decreasing global risk aversion made emerging markets more attractive to investors. Stock indices rebounded after a period of declines causing the Złoty to strengthen. The big news came on Friday with the CPI publication. Inflation in Poland grew to 4.3% (4.1% forecast) on a yearly basis, which way above the 3.5% upper limit set by the central bank. The report brings back the discussion about another interest rate hike by the Polish MPC. Throughout the course of the week, the EUR/PLN declined from zł.3.6270 to zł.3.5810 while the USD/PLN dropped from zł.2.4930 all the way to zł.2.4405.  

Adam Narczewski