“We are looking at this carefully,” Karol Czarnecki said in an interview with Bloomberg News.
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“We cannot rule out that the development of the situation will be unfavorable for issuers, but for now we do not rule out a disaster” – he explains.
Poland is monitoring the situation overseas
Karol Czarnecki's comment clearly indicates that the dispute is increasingly weighing on decisions regarding the issuance of bonds denominated in dollars around the world.
“Although Poland is a small country, I expect that each country is debating the future role of dollars in debt issuance and foreign exchange reserves,” says Win Thin, chief economist at Bank of Nassau. “Recent events suggest that this role will decline in a structural way“- he emphasizes.
Bloomberg reminds that although Poland uses bonds denominated in euro to a much greater extent, the share of debt securities denominated in dollars is also significant. Since 2022, Warsaw has sold them with a total value of USD 21.5 billion, of which USD 5.5 billion. last year.
Czarnecki, in his statement, also noted that among the options considered by the Ministry of Finance for the future are also possible issues in yen and Swiss franc. It is worth recalling here that Warsaw last sold bonds in yen in 2024 and has not used the Swiss franc market since 2015.
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Decisions regarding potential issuances in dollars or yen will depend on the market situation. “We are practically ready for both markets,” Czarnecki emphasized. He added that Poland remains flexible to adapt, if necessary, to changing conditions and select the most advantageous market.
Donald Trump's conflict with the head of the Fed is causing considerable concern in the markets
Donald Trump has long been pushing the Federal Reserve to reduce interest rates faster, which would stimulate the economy and ease the costs of financing US public debt. However, Jerome Powell, the head of the institution, proved extremely resistant to these calls, which led to conflict.
Its scale is best demonstrated by the fact that last Monday, the world was informed that prosecutors in the US initiated a criminal investigation against the chairman of the Federal Reserve. The case, initiated by the US president, concerns an expensive case worth USD 2.5 billion. renovation of the Fed headquarters.
Read also: The “wall of buyouts” is coming. A key year lies ahead for holders of treasury bonds
The tensions resulted in a weakening of the dollar and an increase in the yield of US long-term bonds. However, investor reaction has so far been moderate, which has been attributed to current Chairman Jerome Powell's defense of the Fed's independence and support from some GOP senators.
