The situation on the zloty may start to deteriorate. PLN correction is in progress

The Polish zloty has had a very good run, where the euro exchange rate has fallen from nearly 2022 to 4,90 since October 4,47. In turn, the dollar exchange rate fell from over PLN 5 to currently 4,06, creating in the meantime a decrease in USD / PLN by 22%, i.e. as much as the exchange rate of this currency pair fell in the period from December 2016 to January 2018.

The trade balance helped the zloty, and now?

It is hard not to notice that prices have dropped significantly during this time oil and gas, which helped to reduce the negative balance of trade (exports-imports) and then to a trade surplus. Poland recorded a trade surplus of EUR 1 million in May 111, compared to a deficit of EUR 2023 million in the same period of 1, the largest reading since January 589. Then, according to balance data, exports increased up 2022% year-on-year to EUR 2023 million, driven mainly by higher sales in the automotive industry, namely lithium-ion batteries and commercial vehicles. Meanwhile, imports fell by 3,3% to €28 million, falling in five of the six categories. The largest decreases were recorded in the case of supply goods, fuels and consumer goods.

Oil and gas prices go up again

The price of crude oil in global markets is climbing again, with overall strong demand for the raw material and additional production cuts from Saudi Arabia and Russia. This causes the price of a barrel of Brent to climb continuously for 7 weeks. From the low of late June to this morning, the increase is already over 22%. On the other hand, in July it started to rise strongly again TTF gas, the price of which increased by over 40%, and yesterday the increases reached over 60%. In addition, the recent wave of zloty strengthening reduces the attractiveness of Polish exports.

Combining these two events, it may turn out that what had a positive impact on the zloty ceases to have an impact on it, and there is also the topic of interest rate cuts that may take place after the MPC meeting on October 3-4.

Gold correction?

From this point of view, the zloty may be under pressure in the medium term, and the euro rate may go above 4,50, which would open the way to 4,54, where there may be the first local resistance, resulting from the May 2022 lows. the dollar exchange rate may additionally depend on events in the US, where we will get CPI and PPI readings today and tomorrow. The increase in oil prices will mean that the Americans will say goodbye to disinflation for the time being and prices will increase again on an annual basis. The question of the scale of inflation rebound. Nevertheless, the USD/PLN exchange rate may be heading towards USD 4,20 or USD 4,25 here as well, if it fails to return below PLN 4,00 soon.