Polish importers and loan holders are again suffering because of the ongoing financial troubles in the euro zone.
Last week the z?oty weakened the most out of all assets in global markets. It lost z?.0.12 to the euro, z?.0.2 to the US dollar, and z?.0.17 to the Swiss frank. The euro gained in value and, at z?.4.05, was at its strongest in four months.
Just like in May during the Greek crisis, the present decrease in the value of the Polish currency can be blamed on the fiscal difficulties that Ireland, Portugal and Spain are going through. These concerns are scaring investors away from currencies perceived to be risky, including the z?oty, and strengthening the dollar. The government of Hungary added fuel to the fire by threatening citizens that they will lose state pensions if they don't move their pension contributions from private funds to a Hungarian counterpart of ZUS (Social Insurance Institution).
"Although, the Polish economy has turned out exceptionally immune to the economic crisis, the z?oty is in the same basket with other currencies in the region. If they weaken, the z?oty weakens too," Ken Veksler, senior manager at Saxo Bank, told Puls Biznesu.
The z?oty is losing value even faster than the Hungarian forint, because it is the most important and liquid currency in the region, and at the same time the easiest for investors to pull away from. Concerns regarding Polish public finances are not making the z?oty stronger either.
How long the commotion on the European markets lasts and when exactly the z?oty will regain in value depends on the direction in which the fiscal crisis in the euro zone unfolds. According to analysts, if Spain and Portugal also reach out for EU assistance then investors will lose trust in the euro and the dollar will continue to strengthen.
This means the Polish z?oty will see further volatility.
Poland AM
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