Polish Zloty up on growing German economy

08-13-2009 14:02

The Polish currency gained against the Single Currency as the German economy, Poland’s main trading partner, showed unexpected growth in the second quarter. Poland’s Zloty posted the second-best results of the 25 emerging currencies, rising 1.2% to 4.1090 a Euro. It traded at 4.1144 versus the Euro at 1:06 p.m. in Poland’s capital.

German economy

The Statistisches Bundesamt, the Federal Statistical Office of Germany, reported that the German gross domestic product (GDP) increased 0.3%, seasonally corrected, in the second quarter, while economist forecasted a 0.2% shrink. Germany covers approximately 25% of the Polish export, while the French government reported today that its economy, Poland’s third-biggest export partner, also grew.

Advantage more

Lutz Karpowitz, a currency strategist in Frankfurt at Commerzbank AG, stated: “The Zloty has been spurred by improved gross domestic product numbers from Germany. The economic recovery in the Eurozone will probably favor the Polish economy more than those of other Eastern European, which should result in more support for the Polish currency.”

Stronger rise

The Polish Zloty has gained 19% in comparison with February 17, when it reached the weakest level in five years. The Zloty showed a stronger rise than other nations in the region, while there are speculations that the Polish economy will evade a slump. Only Poland’s economy was able to grow in the first quarter on the back of lower taxes that boosted consumer spending, while the economies of the other 10 Eastern European EU countries contracted.

Faster downtrend

Jan Koprowski, a Forex trader at BNP (Banque Nationale de Paris) Paribas in Warsaw, commented: “The next important level will probably be at 4.08 per Euro and a drop below this level could result in a faster downtrend for the Single Currency versus the Zloty. The Polish currency will adjust back to about 4.20 in case of another scenario.”

Hungary

A report by Hungary's government proved that the most intensive slump in nearly two decades aggravated in the second quarter due to dropping agricultural and industrial production. The Hungarian Central Statistical Office reported today that the nation’s GDP contracted 7.6% on a yearly basis, while it slumped 6.7% in the initial quarter.

Historical levels

Gyula Toth, a Forex strategist at UniCredit SpA in Vienna, announced: “In the second quarter, the difference in economic expansion between Hungary and Poland has probably increased to historical levels that surpass 8%. For that reason we will continue our long Zloty/ Forint trade initiated at 64.60.” Poland’s Central Statistical Office will release data regarding the second-quarter gross domestic product on August 28. The deputy governor of Poland's central bank stated that the Polish economy grew ‘no more than’ 0.5% in the second quarter.

Leu up despite gloomy data

The Hungarian Forint gained 0.4% to 268.49 against the Single Currency. The Czech Koruna (or Czech crown) strengthened 0.2% to 25.75 per Euro. The government of Romania stated that the nation’s economy slumped 8.8% in the second quarter, while it contracted 6.2% in the first quarter. Despite these gloomy figures the Romanian Leu climbed 0.1% to 4.2177 versus the Common Currency.