While Polish zloty weakens, Czech koruna rebounds. Is carry trade behind that?
The Polish zloty hit its 11-month low yesterday as the EUR/PLN approached the 4.30 level. Apart from a national holiday in Poland (preventing zloty´s defence by hedging of exporters), three other explanations of the zloty’s weakness can be identified.
First, recently released weaker-than-expected figures from the real Polish economy (GDP, retails sales, industrial production) could have brought about fears of the NBP turning more aggressive in its monetary easing and tolerating significantly weaker exchange rates of the zloty. This hypothesis, however, can be challenged by recent FRA development, indicating that the Polish fixed-income market has not priced in aggressive easing.
Click here to read the full report: FX Daily
KBC