Euro exchange rate in a local upward trend. The zloty may continue to weaken

The beginning of May did not bring any major changes on the zloty market. The euro exchange rate is slowly going up, exceeding the line of PLN 4.25. According to analysts, the fate of the Polish currency is currently linked to the development of the situation in the Middle East.

On Monday at 10:04 the euro exchange rate was PLN 4.2546 and was 0.8 groszy higher than before the weekend. During the May Day holiday, the currency market was open and reacted with a one-gross decline in the euro.

There has been a local upward trend in the euro-zloty pair since mid-April, with the euro rate rising from nearly PLN 4.23 to PLN 4.2650 recorded last Thursday. However, all this is still taking place within the framework of medium-term consolidation in the range of PLN 4.2250-4.3070. The EUR/PLN rate has been in this range since the beginning of March, i.e. since the outbreak of the war with Iran.

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– This week, trends on the FX market will be shaped primarily by geopolitical factors, a series of data from the American labor market and, locally, the message from the May meeting of the Monetary Policy Council. Assuming no further intervention in the yen market and no significant de-escalation in the Middle East, we see room for moderate strengthening of the dollar and maintaining pressure on the euro and EM currencies – wrote PKO BP analysts.

– In the base scenario, we assume that the EURPLN and USDPLN rates may head towards 4.26 and 3.65, respectively, in the coming days, and the EURUSD rates below 1.17 – they added.

In addition to the blockade of the Strait of Hormuz and the fuel crisis, which is now in its third month, the zloty may be influenced by Wednesday's decision of the Monetary Policy Council and Friday's data from the American labor market. Economists believe that the Monetary Policy Council will keep interest rates unchanged and may signal a more restrictive course in monetary policy.

Meanwhile, on Monday morning the US dollar was worth PLN 3.6294, i.e. 0.7 groszy more than before the weekend. The USD/PLN exchange rate is stabilizing after the upward correction in the second half of April. From the point of view of dollar importers, the situation would only significantly worsen if the dollar rate exceeded PLN 3.75.

The Swiss franc also went up by 0.7 groszy. The Helvetic currency was valued at PLN 4.6381 after the franc cost less than PLN 4.60 in mid-April and was the cheapest since February. The British pound became more expensive by 0.9 groszy and it cost PLN 49,269.

K.K

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