As promised, here are my predictions and expectations of the Euro/PLN movement during the next few months, based on technical and fundamentals.
Due to the Russia-Georgia conflict, economic slowdown in Western Europe and the main market for Western European exports being the US, most of the European regions currencies, including the regions best performing currency PLN, are on downward pressure.
However, the Polish złoty may remain firm for a while on expectation that the key interest rate, which currently stands at 6 percent, may be hiked one more time due to strong second quarter economic growth and labor market results.
One has to look at the PLN in conjunction with analysis of the USD. If problems in the US aggravate, then the PLN might start getting stronger once again, but this also means that the euro will also gain ground. For now, the PLN is likely to weaken to 2.35 against the USD.
Now, let’s take a look at the exchange patterns of the euro to the złoty. Between June 2001 and March 2004, the euro was up from 3.3407 to 4.9429. Then things changed and between March 2004 and July 2008, the euro started to go down from 4.9429 to 3.1940.
The euro/PLN exchange seems to be bottoming at 3.1940, for the time being, and will continue to move up as long as the euro moves down against the dollar.
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Comments can be directed to my email at m.sharma@interglobalfb.com.pl
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