The new week on the currency market started from earthquakes on the rublewhich, among others in connection with the decision to drastically raise interest rates in Russia, he got very weak. On Friday, the dollar had to be paid around 83 rubles, and in the morning the rate jumped to 109 rubles.
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The Polish currency also ricochets, which is infused with the nervousness of investors from all over the world. Since Friday evening, the dollar has risen from 4.12 to even PLN 4.22 at the peak of Monday’s session. The first rather panicky reaction stopped and around 4:00 PM the American currency in the forex is PLN 4.18.
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There has not been such a weak zloty in relation to the dollar since the outbreak of the pandemic in 2020.
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The American currency on the occasion of economic crises and wars is considered “safe haven“It can also be seen in recent days in Polish exchange offices, where many people are not sure about their wills convert zloty on dollars.
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The decisive flow of capital is also visible in the direction of the euro, which it costs nearly PLN 4.70. There has not been such a high exchange rate since the end of November 2021. In the meantime (just two weeks ago) you could buy euro for PLN 4.50.
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Time for currency interventions
“The reaction of the currency market shows that while the previous sanctions were seen by investors as fairly mild, cutting off selected Russian banks from SWIFT and targeting the Central Bank of Russia and limiting its ability to defend the ruble are very strong, decisive moves. They will cause enormous damage to the Russian economy“- commented Ebury analysts.
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They indicate that the situation in the currency markets will now depend on developments in Ukraine and Russia, but also on global central banks’ response to the crisiswhich is likely to exacerbate inflationary pressures and create new economic risks.
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See also: Money. It counts
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“The Polish zloty is one of the currencies that experienced the largest sell-off in response to the Russian invasion of Ukraine. The pressure on the zloty may increase if perceived risk increases. Given the inflationary environment and the fact that the current situation will be working towards stronger price growth, we believe any further sharp weakening should meet the response of the National Bank of Poland“- Ebury experts indicate.
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They note that the Czech central bank has already started sending such signals, declaring the possibility of taking measures to stabilize the situation on the currency market.
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What can NBP do? “We expect central banks in Central and Eastern Europe to limit the cycle of interest rate hikes. The main task, given the current scale of uncertainty, remains the stabilization of exchange rates. Currency interventions should be expected in all countries of the region“- experts from the Polish Economic Institute (PIE) indicate.
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The NBP declares its will to strengthen the zloty
“In the current economic situation, the strengthening of the zloty would be consistent with the monetary policy tightening we are implementing and would support the reduction of inflation,” said Glapiński.
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He added that sentiment fluctuations in the international financial markets have an impact on the level the rate of our currencyespecially the threat of Russia’s aggression against Ukraine, but “the foundations of the Polish economy are so strong that in such a hypothetical situation our economic growth would be fast and our economy would be balanced”.
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Answering questions from Reuters about the exchange rate of the Polish currency, the NBP governor assured on behalf of the NBP that “if the situation in the East worsened, we have tools to support the Polish economy and the Polish currency“.
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