Thanks to the FED, the Polish currency gained. EURPLN lowest in over 3 years

Yesterday's macroeconomic projections Fed made markets euphoric as the Fed ended the cycle of raising interest rates and pointed to a possible series of cuts due to the assumed decline in inflation. What is most important, however, is that, according to the projection, the interest rate is to fall faster than inflation. This, in turn, means a decline in real interest rates to support the so-called soft landing in the US economy. Meanwhile, the decline in real rates in the US may translate into many asset classes, in theory causing their higher valuations. This also applies to emerging markets, Poland and the Polish zloty.

PLN strongest since the pandemic. Euro exchange rate below 4,30

The last time we observed such a low euro rate was in March 2020, i.e. at the beginning of the pandemic. However, taking into account the scale of the decline in the EUR/PLN exchange rate in price and time, i.e. from 4,7 to 4,3 in the period from September to December 2023, the last time we could observe this type of dynamics was in 2015, and earlier in 2012. The situation in 2023 is therefore exceptional and for now it seems that the zloty may have some corrections ahead, but still have good prospects until the first quarter of 2024.

A correction may appear around the last 10 days of December due to potential profit-taking from a strong trend, which could raise the quotations to 4,35 or higher (liquidity issue). Then, the zloty could undergo another wave of strengthening following the upcoming good data from the Polish economy in the first months of next year. An attack on 4,20 would be possible.

What will the ECB do?

An event similar to yesterday's overseas will take place today in Europe. We are talking about the ECB's decision and forecasts. It appears that European Central Bank may also give an indication of no further increase in real interest rates, due to the stagnation of the economy or recession in Germany. Thus, the euro may weaken even more if the Fed's actions were copied EBC this afternoon. So in the short term, 4,25 may attract attention.