The Polish zloty weakened to its lowest level since mid-2009 on Monday, underperforming its peers and adding to recent losses due to pressure from the COVID-19 pandemic, low interest rates and market repositioning.
The zloty was down 0.37%, trading at 4.6575 per euro. The currency has been steadily weakening since February and has lost 2.11% of its value since the start of the year, making it the worst performer among its CEE peers. “The weakening is due to a bunch of local factors, which suggests that the zloty will fall further this week, as far as 4.68 or 4.7,” an FX trader in Warsaw said. “The worsening pandemic situation, the most dovish central bank in the region and the uncertainty about FX loans and the strenthening of the dollar all weigh on the zloty.”
Commerzbank said “the unanticipated change in the Polish outlook could have triggered unwinding of long PLN-HUF positions, which resulted not only in zloty depreciation (vs. EUR), but also in forint appreciation.”
The Hungarian forint slid 0.1% to 362.80 per euro on Monday after firming to a four-week high at the end of the previous session. The currency has been firming since last Tuesday when the central bank left its base rate unchanged and said it was ready to prevent a sustained rise in inflation. Traders have said this helped lift the currency.
The National Bank of Hungary holds an FX swap tender providing euro liquidity to banks again on Monday. The bank has said it would hold foreign currency swap tenders at the end of each quarter if needed to reduce market volatility.
The Czech crown weakened 0.31% to trade at 26.140 versus the common currency. Stocks in the region were mixed. Warsaw was up 1.24% as shares of game maker CD Projekt jumped 8.11% by 0902GMT after plans about the studio’s downloadable content for its Cyberpunk 2077 game leaked. Prague stocks were down 0.69% while Budapest firmed 0.61%.
– Reuters