Bailing out the Polish Zloty....

If Tusk sells Euros to prop up the zloty, will it realistically have any effect at all? I see a short term recovery of course, but realistically, there is nothing to stop it going to 5.50 or even higher because people are just too damn nervous at the moment.

What do ye say, those of you with an opinion? Anyone want to take a bet as to where it will go? Remember every report I read predicted recovery for the last 10 weeks... some how I think it ain't going to recover any time soon.

I think it is still way to premature to speculate where the Zloty will bottom out verse the Euro, and as you pointed out stabilization has incorrectly been pointed out for the last 10 weeks.

There is still a lot to unfold with the global "crisis", and as nobody seems capable of forecasting anything beyond a few weeks time, I think it is too early for Tusk to burn through his Euros. It could have some positive effect, and it could have almost no effect. So why take that risk now? Hold on for a few more months.

The Warsaw Voice had an interesting article today where they suggested that the Euros should be better used in a swap for CHF instead, and the CHF used to convert Polish CHF mortgages to zloty, in an effort to avoid a mass of defaults.

I think Tusk and the Central Bank should resign themselves to the fact that the zloty will continue to fall, and there is little they can do to halt it (perhaps some IMF funding could help). They should instead focus on treating the symptoms, not the disease.

I thought they had accepted this and had decided not to do anything about it, particularly as the weakening Złoty is good news for exporters and thus industries such as the car industry will be doing well?

It seemed that way for some time, but then on Monday Tusk came out and said he would defend the zloty at 5.00 to the Euro. Supposedly the finance ministry went ahead and sold about 1 billion Euro yesterday.


That was the theory, but in working practice it has proven to be terribly wrong. Many Polish companies had taken out huge hedging contracts over the summer when the zloty was at it's peak, hedging against a strenthening zloty. Now these contracts are putting companies out of business. Additionally many Polish companies have issues Euro denominated bonds, or taken Euro loans. Servicing this Euro debt, while generating income in PLN is sucking up all cash flow.

Additionally, most Polish exporters are also importers of parts and materials and currencey fluctuations are hurting them. "The extraordinary pace at which currencies have declined has only aggravated such problems. In Poland, the zloty has fallen in value by 50 percent against the euro. In theory, that should help exporters. But Aleksander Drzewiecki, chairman of the House of Skills, a consulting company, said many export-driven companies depend on imports in the first place. "The turbulence with the exchange rate is horrible," he said. "We have no idea where we stand."

in Poland is there a MONEY CHANNEL TV ? with a website also?

That could be a very good source for related exchange courses / finances news /
etc directly in english language

My opinion is that zloty seems to have been stabilised for the moment around 4.6 zloty for 1 euro...

I find this web site very useful for tracking exchange rates if it's of use to anyone...

exchange-rates.org

It's falling again, down to 4.72. The interest rate has been cut, governments are falling elsewhere in Eastern Europe and well - I think everyone is just waiting for some sort of collapse in Poland.

I'm not even certain that Poland can afford to defend the Zloty at the moment. ZUS has a shortfall of 5 billion Zloty and this will need addressed - so defending the Zloty might not be possible.

So, how is this affecting prices? The price of Polish vodka, beer, etc. Bus fares? A meal in a restaurant?

I think the polish zlote will remain stable at the current rate.

just had a quick look and showing 5.02zł against the pound sterling. has been falling steadily for a week or so.

currencyconverter.uk.com/jump/ggo.html

the pound sterling went from 2.10 usdollars to just 1.35 usdollars in last 12 months,
so i would not compare it with pound sterling, which is extremely weak