Currency exchange rates May 26: euro and dollar rocket drops, 25 groszy! But the worst is ahead! Check how much for one pound (GBP), forint (HUF), euro (EUR), krona (CZK), dollar (USD), franc (CHF)

Almost twenty groszy in five weeks, that’s how much the euro got cheaper in relation to the Polish zloty. The zloty surprised with the scale of its strengthening and now defends its position. It will be very difficult due to the exceptionally high inflation in Poland. It is worth recalling: the beginning of October last year – the euro costs PLN 4.85, WIG20 falls below 1400 points. This is the moment of the greatest pessimism regarding the European economy. The prices of energy resources in Europe are breaking records, and the specter of a crisis caused by the lack of gas in the winter discourages global capital. A lot has changed since then, the situation in the winter period was not so bad, partly due to the favorable weather. The prices of energy commodities have dropped significantly and are now even lower than just before aggression against Ukraine.

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The rest of the article is below the video

The maximum of 52 weeks is the mentioned PLN 4.85 per euroand the minimum is PLN 4.49 (May 15, 2023). At the beginning of the last week of May, the euro was only 0.03 PLN above this minimum. At the same time, the maximum for dollar – PLN 5.04 (September 27, 2022), and the minimum is PLN 4.12 (also May 15, 2023). – Looking at the strengthening of the zloty, one can be surprised by the dynamics of this move, because the euro / zloty is a currency pair on which little is usually happening – says Dr. Przemysław Kwiecień, chief economist of XTB, in an interview with MarketNews24. – If the move is fast, it usually happens the other way, i.e. the zloty loses quickly, but it recovers with pain.

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Looking for justification, the mood of global investors has changed and the overpriced Europe has become a favourite, and the Polish market is often treated by global investors as a kind of “leveraged” Europe. It is the fluctuations of sentiment that can be largely attributed to the glaring weakness of the zloty several times in the past year and its current strength. The fluctuations hide a deeper, more long-term trend, which has not been favorable for the zloty for some time: prices in Poland are rising faster than in the euro area and there is no indication that this will change in the coming years. In the years 2010-2019, it could be considered that sentiment swings take place against the illusory but relatively constant equilibrium exchange rate EURPLN. Since 2019, due to higher inflation in Poland, this equilibrium exchange rate has been constantly growing, and the current strength of the zloty may create a misleading impression of a fundamental change.

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The arguments for strengthening the zloty are therefore not strong, the zloty is as if on steroids – comments the XTB expert. – However, the markets like extremes, they willingly fall into excessive optimism or pessimism, now such optimism can be seen on the currency market and on the Warsaw Stock Exchange. Investors try to squeeze as much out of this trend as possible. It seems that global capital is trying to take advantage of the current sentiment to the maximum, because the zloty has not reacted to any warning signs so far. And there were several of them. EURUSD pair stopped growing and a correction has been drawing there for over a week, the German DAX40 has been stuck below historical peaks for a month, regional currencies do not follow the zloty (the Czech crown even slightly loses against the euro). Last year’s lows on EURPLN are 4.48, just before the aggression towards Ukraine.

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Weaker macro data coming from the Polish economy give hope for the first interest rate cuts by the MPC later this year. Industrial production fell by 6.4% y/y (compared to 3.5% y/y in March), the economy was short of breath. Salaries increased by 12.1% against 12.6% previously, and PPI inflation fell below expectations. Although the price pressure is still high, the failure to meet expectations gives hope for a more stable continuation of the trend. Despite the prospects of a slowdown in the global economy, a lot of foreign companies have been interested in the Polish market in recent months. Global capital returns to our market, the question is whether it is permanent? – The zloty was very undervalued, but the undervaluation has already been erased, and if we look at US inflation outlook, in the zone and in Poland, they are by far the worst in Poland – explains P.Kwiecień from XTB. – This is very important and negative for our economy, because it weakens its competitiveness. For this reason, the zloty will be looking for a new equilibrium exchange rate and it will be a search going in a completely different direction from what we have been observing for five weeks. If Polish inflation is chronically high, which we are in danger of, the market sentiment will oscillate around an increasingly higher exchange rate.

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NBP exchange rates May 26, 2023: NBP currency table

current average foreign exchange rates in PLN specified in § 2 points 1 and 2 of Resolution No. 51/2002 of the Management Board of the National Bank of Poland of September 23, 2002 on the method of calculating and publishing current foreign exchange rates (Official Journal of the National Bank of Poland of 2022 items 10 and 21):

Table No. 041/A/NBP/2023 of May 25, 2023

The above table was published on Thursday and will be valid until Friday noon. The central bank publishes a new currency table every day (on business days) between 11:45 and 12:15.