Zloty bulls celebrate Poland’s poll result

The Polish zloty advanced on Monday as a victory for Bronislaw Komorowski in a tight presidential election over the weekend raised hopes for further economic reforms in the country.

Analysts said the win for Mr Komorowski, a member of the country’s ruling Civic Platform party, meant the Polish government no longer had to worry that its economic policies would be vetoed.

Gaëlle Blanchard at Société Générale said Mr Komorowski’s victory was supportive of the zloty since he would back the government’s economic programme and reforms, notably regarding fiscal consolidation and euro adoption. “We reiterate our bullish stance on the zloty based on strong macro fundamentals and the monetary policy tightening we expect from the National Bank of Poland in the fourth quarter,” said Ms Blanchard. “The zloty is our favourite emerging market currency.”

By midday in New York, the zloty rose 0.9 per cent to 4.1140 zlotys against the euro.

Elsewhere in the region, the Hungarian forint climbed 0.4 per cent to Ft285.45 against the euro, the Czech koruna rose 0.6 per cent to Kc25.510 and the Romanian leu gained 0.8 per cent to 4.2550 lei.

Meanwhile, the dollar stabilised after hitting a two-month low on a trade-weighted basis last week following a flurry of weaker-than-expected US economic data, which dented the currency’s haven appeal.

Analysts said the dollar’s strength over the first half of the year was based on the US economy’s relative outperformance, and that the recovery owed much to the rebuilding of inventories and the effect of fiscal and monetary stimuli. The dollar was also boosted by weakness in the euro.

Michael Hart at Citigroup said the temporary nature of the effects of fiscal and monetary stimuli on the US economy were becoming clear, given the slowdown evident in last week’s data, and that the structural issues facing the US economy would eventually resurface and drag the dollar down. “A stream of disappointing US data appears to be shifting market focus from as yet unresolved issues in the eurozone to the possibility of a renewed slowdown in the US,” he said. “This does not bode well for dollar strength.”

The dollar rose 0.4 per cent to $1.2514 against the euro, climbed 0.4 per cent to SFr1.0661 against the Swiss franc and was flat at Y87.72 against the yen.

The dollar rose 0.7 per cent to $1.5100 against the pound as sterling was undermined by a survey showing weaker-than-expected activity in the UK services sector. Sterling fell 0.3 per cent to £0.8287 against the euro and dropped 0.7 per cent to Y132.51 against the yen.