Gold still strong. EUR/PLN exchange rate at its lowest since June 2022

Despite the return of the rhetoric of interest rate increases in the United States and in the euro zone, the zloty exchange rate remains relatively high, i.e. the zloty remains strong against the world's major currencies. It seems that the main reason for the strength of the PLN, especially in relation to the EUR, is exports and foreign currencies obtained from it, which are then exchanged for the zloty.

A large surplus in Poland's trade balance

As previous data showed trade surplus Poland hit a record €2 million in February 243 as exports surged while imports fell. It was the second consecutive surplus after a year-and-a-half trade gap. Exports increased by 2023% year-on-year to EUR 10 million thanks to a further increase in shipments of automotive products, i.e. passenger cars, lithium-ion batteries and car parts. There was also a large profit in food sales following rising prices. Meanwhile, imports fell by 5,4% to €24 million as food shipments fell sharply, especially from Ukraine.

This week, the EUR/PLN exchange rate fell to the lowest level since June 2022, testing the area of ​​PLN 4,60. In mid-February, the euro still cost PLN 4,79. All this in the face of potential further interest rate increases in the euro zone, where it is possible that we will see monetary policy tightening by 50 to 75 basis points in total until the summer holidays. In theory, reducing the differential in interest rates may lead to a weakening of the zloty in favor of the euro. In this case, a return to the region of PLN 4,70 could not be ruled out. In Poland, we can't count on interest rate hikes, even despite the record-breaking core inflation.

In turn, in relation to the US dollar, the zloty exchange rate stopped near the levels last observed in March 2022. If we were to look for an analogy of the current appreciation of the zloty against the US dollar, we would have to go back to December 2016 and look at the behavior of the exchange rate until December 2017. Then we will see a very similar layout on the chart and even a similar scale of zloty strengthening. If this history were to repeat itself, the potential range of PLN strength could be in the region of 4,10.