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Currencies. How much is the euro. Quotes 23/01/2025

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Thursday is another day of strengthening of the zloty. The euro exchange rate fell below PLN 4.21. According to Mirosław Budzicki, financial markets strategist at PKO BP, a further decline in the price of the euro cannot be ruled out.

On Wednesday euro exchange rate to the Polish zloty fell below the barrier of PLN 4.25, which is important from the point of view of technical analysis. On Thursday afternoon, the euro was quoted even below PLN 4.21 for a while.

The euro is the cheapest in years

– The euro exchange rate is currently the lowest since the beginning of 2020. But further strengthening of the zloty is possible. Of course, the level of PLN 4.2 will constitute some barrier, although this is more psychological resistance. But from a purely technical point of view, the next strong resistance level is PLN 4.13-4.15 per euro. These are the quotations from 2018 and this is the level we are talking about – said Mirosław Budzicki, economist of the PKO BP bank.

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In his opinion, this strong – in his opinion – movement of the zloty was influenced by several factors, but the zloty had remained strong for several months. He recalled that since the beginning of the fourth quarter there had been a visible appreciation of the dollar, which resulted in the depreciation of emerging market currencies.

– In Poland, this move resulted in the depreciation of the zloty in that period to approximately PLN 4.38 per euro, but the scale of the weakening of our currency was hampered by the awareness that with such zloty exchange rate Ministry of Finance may decide to sell currencies flowing into our country. Usually, it works like this: either the Ministry of Finance decides to sell currencies, which limits depreciation, or investors become more cautious for fear of the Ministry of Finance's move – explained a PKO BP economist.

However, as he noted, after this weakening the zloty gained strength and as a result, already in December the market tested the level of PLN 4.25 per euro. According to Budzicki, this means that the zloty remained strong during the period of turmoil related to expectations for a change in economic policy USA under the newly elected government Donald Trump.

What favors the Polish currency?

– Additionally, the zloty was helped by the fact that the NBP maintains high rates interest rates and presents at least a moderate, if not downright hawkish, stance, which maintains or deepens the interest rate disparity between Poland and other countries. This position was emphasized in December and January by a change in the rhetoric of NPBP President Adam Glapiński. While in October and November the president talked a lot about the possibility of reducing rates already in the first half of 2025, he recently stated that this scenario is unlikely and that a rate cut is possible next year – said a PKO BP strategist.

The economist admitted that the situation on the bond market in our country could also have influenced the strengthening of the zloty. Due to the large borrowing needs of our country, the Ministry of Finance is selling large tranches of bonds.

– This is certainly not a dominant factor, but for several months we have been observing that debt securities portfolios held by foreign investors are growing. In addition, capital from abroad may flow to the stock market, which has seen recent increases, and funds from abroad may also flow to the money market, Budzicki said.

He emphasized that these factors were not enough to break the level of PLN 4.25 per euro until an impulse from the USA appeared. This impulse turned out to be, among others, data lower than expected inflation base, which increased market expectations for a rate cut in the US.

– As a result, the dollar weakened and the yield of American bonds decreased and the demand for risky assets increased, and as a result, emerging market currencies began to appreciate. The Polish zloty also benefited from this, said Mirosław Budzicki.

Main photo source: Shutterstock



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