The rates of the main currencies dropped significantly. There hasn’t been anything like this on currencies for years! [EUR/PLN, USD/PLN, GBP/PLN, CHF/PLN]

Last week EURPLN exchange rate dropped to 4.3899 (PLN strengthening by 0.8%). Throughout last week, the EURPLN rate was in a clear downward trend. Thus, on Thursday evening it reached the lowest level since March 2020. The zloty was strengthening following the increase recorded last week EURUSD rate in reaction to the publication of lower than expected inflation data in the USA.

Locally, positive factors for the Polish currency exchange rate included the publication of higher-than-expected domestic data on GDP, balance of payments and inflation, lower expectations for further interest rate cuts in Poland and reduced uncertainty among some investors regarding the stability of the future government after the election of the candidate proposed by the Coalition as Speaker of the Sejm. Civic, Third Way and New Left.

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This week, the planned domestic data on industrial production (Tuesday) and retail sales (Wednesday) will be crucial for the zloty exchange rate. If our forecasts are lower than the market consensus, they may weaken the Polish zloty. In our opinion, the remaining publications from the Polish and global economy scheduled for this week will be neutral for the zloty exchange rate.

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National production and retail sales data in focus

Last week, 2 years old IRS rates decreased to 5.10 (decrease by 4bp), 5-year to 4.65 (decrease by 14bp), and 10-year to 4.78 (decrease by 16bp). Last week, IRS rates fell following the core markets. The publication of lower-than-expected inflation data in the US contributed to the decline in yields on the core markets, which reduced expectations for further interest rate increases in this country. Locally, the decline in IRS rates was driven by lower investor expectations for further interest rate cuts in Poland, which was reflected in the increase in FRA rates, especially visible at the long end of the FRA curve.

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This week will be crucial for investors publication of national data on industrial production (Tuesday) and retail sales (Wednesday). In our opinion, they may lead to a slight decrease in IRS rates. We believe that the remaining publications from the Polish and global economies scheduled for this week will be neutral for the curve.

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Forecasts of monthly macroeconomic indicators

Forecasts of quarterly macroeconomic indicators