Polish Zloty Continues to Strengthen, Czech Inflation Falls, Turkish Unemployment Hits Multi-Year Low


The Polish currency continues its strengthening march for another day. The Czechs are winning against inflation, and in Turkey, despite rampant inflation, we see multi-year unemployment lows.

Inflation in the Czech Republic takes a dive

Referring to a certain journalistic principle, it can be said that the Czechs have been envious of our success in inflation combat. The annual inflation rate has dropped from 8.5% to 6.5%. As you can see, such miracles happen not only in Poland. The problem is that the primary factor lowering inflation in the form of cheap fuel is ending. In Poland, they will probably end a bit later, but still. However, this doesn’t change the fact that such results have a chance to lower citizens’ inflation expectations, which will further reduce the potential pressure on price increases. Interestingly, the Czech Koruna is the only one in our basket that has lost against the Euro in recent days. This is a stark contrast compared to the Polish zloty, but even compared to the Hungarian forint, there is a clear difference.

The extraordinary strength of the Polish zloty

There are currently several processes taking place in the Polish market, which will be hard for analysts who favor technical analysis over fundamental to explain. A week ago, the Euro exchange rate was 4.64 PLN. Today it fell below 4.52 PLN. This means that the Polish currency is gaining against the Euro by an average of more than 2 groszy every day. Against the dollar exchange rate during the same period, it was even over 3 groszy. This is not a normal pace of strengthening for our currency. On the other hand, it is clearly seen that we have a large inflow of funds in the bond market. Investors believe that bonds with a yield of 6% are a great deal in the case of 10-year papers. They bought so many that, after price changes, you can only earn 5.7% now. This is a very good change from the perspective of the winners of Sunday’s elections. They will have to emit a lot of them to cover social expenses.

Good changes over the Bosphorus

In economical terms, Turkey is currently associated primarily with news about rising inflation, a weakening lira, and a return to monetary policy norms after many years of experiment. However, yesterday we learned about unemployment and industrial production growth data. These are not numbers that have the potential to shake the market. But they do create a good atmosphere for the main readings. The declining unemployment is the lowest in many years, showing that the economy is not on the wrong track.

Today in the macroeconomic data calendar, pay attention to:

14:30 – USA – producer inflation.

Maciej Przygórzewski – chief analyst at InternetowyKantor.pl and Walutomat

The post Before the elections, the zloty is strengthening, despite the lack of fundamental bases first appeared on CEO Magazine.