The conflict related to the conflict in the Middle East was supposed to stir enough to stir on the financial markets that economists mostly expected a lack of interest rates in Poland. Meanwhile, on Wednesday, the Monetary Policy Council cut rates of 0.25 percentage points. The main reference rate thus drops to the level of 5 percent.
The zloty reacted the fastest to an unexpected reduction in interest rates. The Polish currency clearly weakened, which translates into Increase in courses, among others euro and dollar.
Wednesday's ratings of the euro
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STOOQ.PL
Wednesday's dollar quotations
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STOOQ.PL
About 15 minutes from the announcement of the Polish REMUNE decision The euro exchange rate was PLN 4.27, and the dollar – PLN 3.63. In the morning, both currencies could be bought at Forex after 4.25 and 3.60 PLN respectively.
This is quite a typical reaction. When interest rates fall, the currency of a given country usually weakens. This is because The lower feet mean lower profits from investments denominated in this currency, for example from bonds or bank deposits. Investors looking for higher returns can transfer capital to countries offering higher interest rates, which reduces the demand for local currency and causes its depreciation.
In addition, a cheaper loan can stimulate national consumption and investments, which can lead to increased imports, and this can also negatively affect the exchange rate, increasing the demand for foreign currencies.
