Last year, the National Bank of Poland increased fastest gold resources in the world. Their number in Polish reserves increased by 101.8 tons. The next two central banks: Kazakhstan and Brazil bought half of what the NBP bought. The central bank intends to buy enough of the precious metal to bring it to 700 tons. With such quantities, the gold reserve will probably exceed the previously planned 30%. share in the value of Poland's reserve assets.
As a result, investors around the world are beginning to link the Polish zloty with the gold exchange rate. This worked great when gold was rising, but on Friday it crashed. What else can you call a decline of 11 percent? up to $4,745 per ounce? However, on Sunday there was an increase of 0.4%, and on Monday we continue to make up for Friday's losses, because gold prices increase by 1.5%.
However, Friday's decline was not without consequences for the Polish zloty. On Monday, it lost 0.3% against the dollar. (exchange rate PLN 3.5631) and 0.15 percent against the euro (exchange rate PLN 4.2175).
Dollar to Polish zloty exchange rate
Euro to Polish zloty exchange rate
And all this in the context of the purchase of Polish government bonds (decrease in yield) and the return to Polish shares after the morning's declines. The yield on Polish 10-year bonds in international quotations dropped to 5.09%.i.e. by 0.03 points. percent from Friday, which may indicate demand from foreign investors. However, WIG is losing, but only by 0.4%, so there is no clear outflow of capital from Poland.
Gold price and the zloty exchange rate
This proves that the price of gold itself has a significant impact on the decline in the zloty exchange rate. Since it already constitutes almost one third of reserves, its prices are also reflected in the zloty. An increase in the dollar exchange rate of gold will therefore strengthen our currency, and vice versa – a decrease in its price will also translate into a weakening of the Polish zloty.
Even despite the demand for Polish bonds and the quotations of the key indexes of the Warsaw Stock Exchange that are still close to record highs, the zloty is weakening against the dollar and euro.
Of course, cash flows are also important here: KPO, dividends, exports and imports of goods and services, interest paid abroad on Polish debt. All this affects the exchange rate of the zloty, but gold also has a great importance here. And its weakening since Friday also weakened the zloty.
