How will the market react? Dollar strengthening, weakening of the gold and escape to safe assets

After the US attack on Iran, you can expect to escape to safe assets, i.e. The dollar fortifications and the weakening of the zloty, but this effect should be moderate – said PAP economist PKO BP Mirosław Budzicki.

On Sunday, the US conducted an attack on three nuclear facilities in Iran. US President Donald Trump also said that more attacks on Iran are planned for now. Earlier, because over a week ago, Iran was attacked by Israel.

“Reaction to what happened, There will be a classic off off, i.e. escape to safe assets. You can expect a dollar strengthening, which has been moderately gaining value for some time. Moderate, because generally the dollar has been behaving less well recently due to the change in US economic policy, “PKO Bank Mirosław Budzicki told PAP PAP.

On Friday, the dollar exchange rate at the end of trade was about 1.15 euros.

According to the economist, this retreat from risky assets will also be visible on the stock exchanges, where you can expect a decrease in indexes. In the case of Poland, the zloty weakening can be expected, but it should be moderate.

“What is happening in the Middle East has not affected the zloty, they are quite stable. But it must also be noted that we have recently had events such as the vote of confidence in the government or a change in the position of the Monetary Policy Council on less pigeon, which should strengthen the golden. Expect the weakening of the zloty, but it will be moderate and short -lived, “said the economist.

On Friday, at the end of trade, the euro cost nearly PLN 4.27, and the dollar just over 3.7 PLN.

Mirosław Budzicki pointed out that they reacted slightly differently to recent events. Generally, a retreat from risky assets should lead to an increase in bond prices for countries such as the USA, i.e. to decrease in profitability. Meanwhile, these changed to a small extent.

“These events take place in the Middle East, i.e. in a region rich in oil and gas. The market is afraid that the consequence of the attacks will be the blockage of the Strait of the ORMUZ, and in effect there will be limited to the supply of oil and gas in the world. The oil has already exposed clearly after Israel's attack on Iran, the price of Brent oil barrel has increased from approx. 70 dollars to around $ 78. Naftowa has a pro -wire, which in turn can lead to suspension or restrictions on the reduction of the feet that the market is expecting, and this leads to an increase in profitability, and therefore we have concerns about the escalation of the conflict, which should lead to a decrease in profitability, and at the same time concerns about inflation can lead to their growth, so both effects endure, “said Budzicki.

He emphasized that also in the case of Polish bonds there was a similar effect and the profitability of Polish papers was also quite stable. He added that for the further development of the situation, it will be crucial to how much the conflict will last and whether Iran's response will be limited. He reminded that until now Iran – contrary to the announcements of attacks on the US base – limited himself to bombing with Israel's rockets and drones.

“If Iran's response is still limited, then the market will probably recognize that the conflict will remain limited and only a moderate reaction of the markets can be expected, similar to what we have had so far. However, if it turns out that Iran will decide to escalate and answer, for example, attacks on American bases or base of European countries, then you can expect a more pronounced outflow from risky assets.” Budzicki. (PAP)

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