PLN expected to appreciate further in the next months – Danske Bank

Morten Helt, Senior Analyst at Danske Bank, sees the Polish currency gathering extra traction in the medium term.

Key Quotes

“In emerging markets, the PLN strengthened by almost 0.4% against the EUR yesterday after fairly strong unemployment data and central bank minutes from the July meeting revealing growing disagreement within the National Bank of Poland (NBP) board about the monetary policy stance”.

“The minutes revealed that some policy makers saw the possibility of looking at higher policy rates should incoming data in coming months point to rising inflation”.

“This supports our basic view that PLN will see support from more hawkish pricing of the NBP stance by the market, which prices in only a 60% chance of a rate hike over the next year, which is too dovish in our view”.

“We see the EUR/PLN falling to 4.26 in mid-September followed by a more pronounced move lower over the next year to 4.16, below the consensus forecast of 4.20”.