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Monday, August 15, 2022

Zloty exchange rate against EUR, CHF, USD. Expert commentary by Maciej Jaszczuk

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The economic times are hard, the markets are already considering not so much whether there will be a recession, but how deep and for how long – said Maciej Jaszczuk, journalist of the blog “Subjecttywnie o finansach”, referring to the weakening of the zloty. The expert added that “from the point of view of asset management, it is worth using safe currencies and bonds.” – These are dollars, euros, and not a currency or a bond of a developing country like Poland – he explained.

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– As for the zloty, everything we import at the moment will be more expensive now. The weaker the zloty, the more expensive fuels are, because oil is imported from abroad. Likewise, food prices are usually quoted on the world markets in dollar terms. So it is a big problem not only from the point of view of our savings or trips abroad, but also because prices in Poland will simply be higher – he explained.

He added that the issue of the rule of law in Poland “certainly does not help”. “The economic times are hard, the markets are already considering not so much whether there will be a recession, but how deep and how long. From the point of view of asset management, it is worth using safe currencies and bonds. These are dollars, euros, and not a currency or a bond of a developing country like Poland, he said.

“The strength of a currency depends on the strength of the economy”

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He stressed that “the strength of a currency depends on how strong the economy is, how strong the exports are.” – Data will get in from German, which showed the first deficit since 1991, they show that the European economy is also slowing down. The European economy is our biggest trading partner, if Germany does not export, we will not produce the components it needs, he said.

The expert also pointed to the tightening of monetary policy in many places around the world. – Everyone is fighting with inflationthey are racing on interest rate increases – He said. – On the other hand, despite the fact that these rates are rising, President Glapiński has already announced cuts that are to come at the end of next year. All this weakens the effect of expectations that our central bank is determined to defend the Polish currency – he explained.

Maciej Jaszczuk explained that “the higher the interest rates are in a country, the more attractive the currency of a given country is”. – She theoretically gives a higher interest rate. If some raise and others raise less, relatively those who raise less lose the value of the Polish currency – he said.

How much can interest rates rise?

The next meeting of the Monetary Policy Council will be held this Thursday. It will be the last meeting before the summer break – there is no decision-making meeting in August. There is no consensus among economists’ forecasts as to the amount of the July rate hike.

According to economists from Goldman Sachs, the Council will raise the main rate by 75 basis points to 6.75 percent during the next meeting. The economists of Bank Pekao are also expecting an increase of 75 basis points.

PAP / Maciej Zieliński

The Polish Economic Institute said last Wednesday, even before the publication of preliminary inflation data in June, that in July interest rates would rise by 50 basis points to 6.5 percent. and it will be the end of the rate hikes cycle.



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