November 30, 2022

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What about the coins?  The outlook (2022/2023) is not very optimistic

What about the coins? The outlook (2022/2023) is not very optimistic

fot. Exchange rates surprised the Poles: what next for currencies? The outlook (2022/2023) is not very optimistic

External feelings dominate the zloty. This in turn, given the actual scenario of weak global economic situation and massive energy price increases in Europe, remains unfavorable for risk-averse assets. EUR/PLN صرف exchange rate It is still at historically high levels (around 4.80), although there is a lower probability of a permanent breakout of 5.00 PLN per euro due to discounting several potential threats. In the fourth quarter of 2022, we see no room for a significant strengthening of the zloty, as we anticipate factors supporting interest in so-called safe havens (Zloty negative). The more extreme this volatility increases as a result of a possible escalation of the energy crisis.

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Moreover, in the short term, local factors will not be arguments that would favorably distinguish the zloty from the rest of the region. A delayed influx of KPO funds or a deepening of negative interest rates (the monetary policy board is ready to end the tightening cycle soon and CPI inflation may increase at the beginning of 2023) will build a picture of the local currency that is not very attractive to foreign investors. The importance of transparent central bank rhetoric or the lack of major disagreements between a member state and the European Union is demonstrated by the examples of the Czech koruna (by far the best-performing among Central and Eastern European currencies) and a regional outsider, ie the Hungarian forint.

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The outlook for the zloty in 2023 looks a little better

However, the slight appreciation of the Polish currency, which we expect, will be due to global sentiment supporting all emerging market currencies, and not to the domestic aspects. Although we make a positive assessment of the situation that the Polish economy, unlike the euro, will avoid a recession, while the issue of persistent macroeconomic imbalances (inflation, high general government deficit, current account deficit), fiscal tensions in the election year and the conflict in Ukraine may It causes anxiety (a further increase in CDS rates).

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Zloty Drama: Crumbled!  The euro exchange rate at historical levels!  Exchange rates surprised the Poles: what next for currencies?  The outlook (2022/2023) is not very optimistic - 2

The short-term prospects for the zloty worsened even more,

This is expressed as an increase in the expected rate of EUR / PLN at the end of the year to 4.75 (versus 4.60 previously). However, in the current conditions, point forecasts are saddled with high risks, and in the face of rising threats, we still consider the scenario of continued weakness of the zloty to be too high. On the other hand, next year is the period of the expected moderate increase in the EUR/USD exchange rate, which is negatively correlated with changes in the EUR/PLZ pair, which will be a source of gradual strengthening of the zloty.

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Balance of opportunities and threats to the EUR/PLN exchange rate




balance of risk

Factors affecting the strengthening of the zloty

Factors affecting the weakening of the zloty

short term (up to 3 million)

  • An increase in the Eurodollar motivated by among other things reducing the interest rate differential between the Eurozone and the United States
  • Previous temporary peak of domestic CPI inflation and temporary rise in real interest rates
  • The economic situation is better than expected in Poland
  • Political agreement to mobilize funds from the National Reconstruction Plan
  • National National Bank interventions in currencies and the sale of currencies by the Ministry of Finance directly in the currency market

  • More aggressive stance of the largest central banks on monetary tightening (deterioration of carry trade conditions between Poland, the eurozone and the USA)
  • Growing concerns about the emergence of a recession in the global economy
  • Cessation of energy supplies from Russia
  • The escalation of the military crisis in Ukraine and more capital flight to the so-called safe havens
  • Growing imbalances in the domestic economy (external, financial), including extremely negative interest rates
  • Monetary policy tightening cycle concludes on concern of slowing economic growth

Long term (more than 3 million)

  • Increased risk appetite resulting from the intensification of diplomatic activities between Russia and Ukraine Relatively strong – despite the risks – economic growth prospects compared to the countries of the European Monetary Union and, above all, the avoidance of recession by Poland
  • The embodiment of the soft landing scenario in the American economy
  • Reducing expectations for monetary policy tightening by the Federal Reserve • Reducing political tensions between Poland and the European Union

  • Energy crisis and deep recession in Europe
  • Further embargo on KPO funds Escalation of the conflict between Poland and the European Union
  • Low real interest rates in Poland (starting in the first quarter of 2023) • Risk of changing rating expectations in the face of continued fiscal stimulus (in election year) negatively affecting public finances
  • Deepening CA deficit and deteriorating macroeconomic balance (eg inflation and budget deficit) in Poland
  • Interest rate cuts in 2023 . stronger than in other Central and Eastern European banks
  • Prolonged active military intervention on the territory of Ukraine and increased geopolitical tension in the world
  • Another increase in CDS rates

data i Forecasting

Zloty Drama: Crumbled!  The euro exchange rate at historical levels!  Exchange rates surprised the Poles: what next for currencies?  The outlook (2022/2023) is not very optimistic - 3