The zloty has not been this strong for years. He has already broken one psychological barrier and is close to the second

is having a great week. Since Monday it has been growing at a very high pace, which has allowed it to reach levels not seen for years. The pound has already dropped to PLN 4.99. The last time it cost below PLN 5 was in 2020. And the British currency is still cheaper, by 0.50% since yesterday’s closing.

Pound exchange rate photo: stooq.pl

Also from 2020, it cost no less than PLN 4.40. The euro was below this threshold for a long time in 2019. On Thursday, November 16, the exchange rate of the common European currency dropped to PLN 4.37, i.e. by 0.36%. less than yesterday.

Euro exchange rate photo: stooq.pl

Dollar close to the psychological border

We don’t have to go that far back to find the dollar rate below PLN 4, because the American currency cost less in July this year. However, again it was only a temporary breakdown, as in the case of the euro. For a long time, the dollar cost less than PLN 4 in 2021. On Thursday, the USD/PLN exchange rate is PLN 4.02, 0.48 percent. less than yesterday.

Dollar’s exchange rate photo: stooq.pl

The Swiss franc costs PLN 4.53. That’s 0.54 percent. less than at the close on Wednesday. CHF has not dropped below PLN 4.50 since the beginning of 2022.

Franc exchange rate photo: stooq.pl

Why is the zloty so strong?

The increase in the zloty began when data from the USA (slightly lower than expected) and data on Poland were released.

A bit of an exaggerated reaction, but a very good one. In general, Poland is more and more overweighted in investment funds after the elections, because before it was underweighted. Now the percentage of Poland’s share in investment baskets is increasing, so there is an inflow of capital

– Piotr Kuczyński.

“The zloty, the strongest against the euro in over 3 years, is mainly the result of a more hawkish message coming from the Monetary Policy Council and better prospects for receiving funds from the EU. However, the inflationary foundations for the PLN exchange rate have also improved, which may be somewhat surprising,” we read on the BNP Paribas profile about Markets on X.

However, mBank analysts believe that the trend of the Euro exchange rate will cause the exchange rate to drop to PLN 4.20. And here are levels not seen since the turn of 2017 and 2018. “A more hawkish MPC, the communication of higher rates for longer, expectations for an expansionary fiscal policy, expectations for the unblocking of EU funds, a weaker dollar and the strengthening of the zloty resulting from all factors create a very interesting mix that at the same time reduces the need to maintain high rates for a long time, which is partly behind current strengthening of the zloty. Perverse but better policy mix differs from the worse policy mix in that the former, not the latter, is more stable. As they say, fortune favors the brave,” write mBank experts.