The euro exchange rate is rising for the fourth day in a row. The strengthening dollar harms the zloty

Surprisingly good data from the Polish economy did not help the zloty. The euro exchange rate was going up due to the uncertainty related to the situation in the Middle East. Our currency was also damaged by the strengthening US dollar.

On Thursday at 10:40 the euro rate increased by 0.7 groszy, reaching PLN 4.2529. In this way, the zloty is weakening for the fourth day in a row after the euro rates reached their lowest level since the US-Israeli attack on Iran on Friday. However, an unsuccessful attack on the lower limit of the “war” sideways trend (in the range of PLN 4.2250-4.3070) caused the Polish currency to weaken again.

The stalemate in the Middle East does not favor the zloty. Although US President Donald Trump has extended the ceasefire indefinitely, peace talks with Iran have still not resumed and the Strait of Hormuz remains essentially closed to commercial shipping. There is also an ongoing blockade of Iranian ports, which further limits the already severely depleted oil supplies.

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– Despite the US-Iran ceasefire, navigation in the Strait of Hormuz remains limited, which has a negative impact on oil prices. The Washington Post, citing Pentagon estimates, reported that it could take six months to remove all the mines in the Strait of Hormuz, and the demining operation itself is unlikely to begin before the end of the war. This would mean that the economic effects of the war may be more protracted than currently assumed, PKO BP analysts wrote in their morning report.

The zloty quotations were not supported by surprisingly strong data from the Polish economy. March industrial production shot up by 9%, which no one expected. Retail sales also grew at a slightly slower pace, which also positively surprised economists. However, they warn that such good March results may be a combination of one-off events and are unlikely to be repeated in April.

The Polish currency was undoubtedly harmed by the strengthening of the US dollar. Since the beginning of the week, the EUR/USD rate has decreased from 1.1850 to almost USD 1.17 on Thursday morning. The appreciation of the dollar usually has a negative impact on the rates of currencies from emerging markets, such as the Polish zloty. As a result, in the morning the US dollar became more expensive by 0.8 groszy and cost PLN 3.6342. These are the highest “green” ratings in almost two weeks. And on Friday, the USD/PLN exchange rate was the lowest since February.

The Swiss franc went up by over a penny, valued at PLN 4.6337 on Thursday morning. This week the franc has gone up by 4.5 cents after being the cheapest in two months last Friday. The British pound was quoted at PLN 4.9067, i.e. 0.8 groszy above Wednesday's reference price.

K.K

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