Political instability weakens Polish złoty

The złoty on Wednesday hit two-month lows against the euro and the Swiss franc, said Konrad Ryczko from DM BOŚ brokerage.

“The pre-election weakening of the złoty continues. EUR/PLN rose to a level of 4.27 and reached the highest levels since January,” tweeted Jakub Tomaszewski, an analyst for TVN BiŚ.

DM BOŚ’s Ryczko added that the złoty also remained one of the weakest currencies included in the CEE basket over the last five sessions.

“On the one hand this is a derivative of the strengthening of the euro, what stopped the appreciation of virtually all [Emerging Market] currencies, on the other hand is probably the aftermath of the new information policy, which came to light [on Tuesday]. This relates to the Polish TLTRO program [Targeted longer-term refinancing operations] that PiS has recognised as a means of financing investment in the economy (PLN 350 billion in six years),” mBank wrote in a statement on Wednesday.

Conservative Law and Justice (PiS) are likely to raise the majority of the vote and be able to form a coalition government on the election set for Sunday 25 October, according to opinion polls.

The party announced in July that if it were to head the government, a TLTRO programme would be used to boost investment.

"We propose an economic system based on investing. We want to make use of European funds, excess liquidity of banks, rewarding investments by private entrepreneurs. We want to use modern mechanisms, such as LTRO, in order to get from PLN 160 to 220 billion, and expand the capabilities of guarantee of the [state-owned] BGK bank to an an additional PLN 65-100 billion," the party's candidate for Prime Minister, Beata Szydło, said in July. (rg/rk)

Source: TVN BiŚ