Polish currency gains after central bank head changes tactics

Wojciech Pacewicz/PAP

The zloty strengthened against the euro on Thursday, climbing to PLN 4.60, its strongest value in three weeks.

The mild change in fortune for the Polish currency came as the result of, according to the economists, a change in the language of Adam Glapinski, the governor of Poland's central bank (NBP).

"I am changing the rhetoric," he said. "Inflation is not temporary, inflation is burdensome," said Glapinski on Wednesday.

He pledged that bringing it down to "the minimum level" is a target, but not at the cost of high unemployment. “We will cope with inflation," Glapinski added. According to the NBP's current forecasts, after Q1 2022, the inflation rate will be decreasing. "It won't be as acute, though it will be around 5 percent," Glapinski estimated.

The banker had earlier said Poland's high inflation rate was temporary.

Another factor working in the zloty's favour was a report on Wednesday by the Financial Times saying that the stalemate around unblocking the EU recovery funds for Poland might be soon come to an end.

On Thursday, economists at Millenium bank said that "the zloty strengthened considerably, partly thanks to yesterday's article in the Financial Times on a possible breakthrough in negotiations between Poland and the European Union on the endorsement of the National Recovery Plan (KPO) and the statement by the governor of Poland's central bank (NBP)."

The NBP set its fixed EUR/PLN exchange rate at 4.60 on Thursday.

The inflation rate in Poland hit 7.7 percent in November.