Strong depreciation of the zloty continues. USDPLN above 4,84

Deteriorating sentiment in global markets, EUR / USD exchange rate attacking the parity level, but also the entire set of domestic risks, are behind the zloty discount. The dollar in relation to the Polish currency is today the most expensive in history, and the euro and the franc are the most expensive than the "war panic" in March this year. 

The market is massacring the zloty

In the currency market, the escape from the zloty continues. On Tuesday morning, the dollar and the euro had to be paid over PLN 4,84, and the Swiss franc exceeded PLN 4,91. The American currency was thus the most expensive in history, and the other two recorded the highest levels since the "war panic" in early March this year. And this is probably not the end of the weakening of the Polish currency. The unfavorable mix of global and local factors suggests that this tendency will continue. The level of PLN 5 for the three main currencies does not seem abstract at the moment.

USD / PLN daily chart. Source: Tickmill

EUR / PLN daily chart. Source: Tickmill

Not only is he losing PLN

The sell-off of the zloty goes hand in hand with the sell-off of other currencies in the region, but it also loses in relation to some of them. Today, the Czech koruna was valued at its highest in history, strengthening in one year to the zloty by over 10 percent, and in two decades by over 40 percent.

Behind the depreciation of the zloty, as well as other currencies of emerging markets (especially the Hungarian forint), is the strong deterioration of moods in the global markets observed since the beginning of the week and the correlated decline in EUR / USD towards the parity (1,00). They are a consequence of the resurgent fears of a strong recession in Europe caused by the energy crisis, amid persistent fear of high inflation in the US (inflation data will be released on Wednesday and Thursday).  

Polish currency is also damaged by local factors. One of them is the poor, according to investors, response of the Monetary Policy Council (MPC) to the very high inflation in Poland (15,6% in June despite the anti-inflation shield in place). Especially in a situation when the US Fed raises interest rates sharply, creating a higher benchmark for monetary policy in Poland, and the fiscal policy of the government additionally fuels the rise in prices in the country. All this leads to conclusions, confirmed in the published today by National Bank of Poland the newest "Inflation Report"that the period of rising prices in Poland will be extended and inflation will return to the target. Another factor weighing on the zloty is the deteriorating balance of Poland's current account month by month or the risk of a technical recession in the second half of the year.