FXStreet (Edinburgh) – The Polish Zloty is poised for further depreciation in the near term, according to analysts at Goldman Sachs.
Key Quotes
“We revise our Zloty forecasts following an increase in Euro area rates and a deterioration in Greece-related risks”.
“That said, we think the Zloty should remain supported by the solid growth outlook, a substantial narrowing of the current account deficit, a positive short-term rate differential and, on a longer horizon, the first NBP rate hikes (which we expect in 2016H2)”.
“This should help the Zloty stabilise after the recent sell-off. However, in the meantime, any further widening of spreads on Euro area peripheral bonds or worsening of risk sentiment would weigh on the Zloty, through their impact on portfolio flows”.
“Expectations for the first Fed rate hikes, as well as uncertainty over the direction of policy after highly-contested parliamentary elections in October, can also add to Zloty weakness and volatility”.
“The high liquidity in the Zloty market will likely add to this sensitivity. But tail risks should remain limited by large international reserves (nearly EUR94bn) and a US$21.7bn Flexible Credit Line from the IMF, available until early 2017”.
“We revise our EUR/PLN forecasts to 4.15, 4.10 and 4.05 in 3, 6 and 12 months, respectively, from 3.93, 3.95 and 4.00”.
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