The zloty is getting stronger, investors are already looking at May [MARKET COMMENT]

The peak of the zloty weakening is behind us. Accelerating inflation in Poland and the prospect of recovery from lockdown in 2-4 weeks are helping, which will bring a strong popandemic rebound in the economy closer.

A week ago, the EUR / PLN exchange rate broke at 12-year records, which made the weakness of the zloty one of the media topics. Today the euro is priced 10 groszy less and everything indicates that the peak of the zloty's weakness is already behind it.

The first half of Wednesday's quotations on the domestic currency market was marked by the appreciation of the zloty against the euro and the dollar. At 13:20 pm the EUR / PLN rate, which was attacking the level of PLN 4,6050 in the morning, fell by PLN 1,4 to PLN 4,5760 and tested the lowest levels in a month.

EUR / PLN daily chart. Source: Tickmill

At that time, USD / PLN fell by PLN 1,8 to PLN 3,8490.

USD / PLN daily chart. Source: Tickmill

Importantly, today's strengthening of the zloty takes place despite the government's announcement of extending the lockdown in Poland until April 18, and despite waiting for the results of the Monetary Policy Council meeting, which beyond all doubt will maintain its dovish attitude in monetary policy and its aversion to a stronger zloty, which after all, it does not encourage the purchase of domestic currency.

So where did this come from appreciation? The strengthening of the Hungarian forint and the Czech koruna are helping, as these currencies respond to the announcement of lifting pandemic restrictions in these countries. Investors hope that after April 18 (or slightly later) similar decisions may also be made in Poland. Especially that in the second half of April, a significant acceleration of the vaccination rate in the country is expected, which would further bring the opening of the economy closer, and thus the expected strong popandemic recovery in Poland.

The second factor supporting the zloty is its continued growth EUR / USD. Which is also related to the easing of restrictions in Europe. The pair's rate returned to 1,19, slowly moving towards the first target, ie to $ 1,20.

The current balance of forces on the EUR / PLN and USD / PLN charts, but most of all ignoring unfavorable information (longer lockdown, dovish RPP) and focusing on opening European economies, together with accelerating inflation in Poland, make the thesis that the worst period of the zloty is over. The next weeks and months should be marked by its appreciation.