- Polish Zloty swoons on Ukraine grain spat.
- The bad news is accumulating for the PLN, which is still reeling from surprise rate cuts.
- Polish grain bans from Ukraine to face legal contention.
The USD/PLN has tipped into six-month highs near 4.3850 as the Polish Zloty (PLN) continues to sag against the Greenback (USD) following agriculture comments from Polish Prime Minister Mateusz Morawiecki, who is threatening to extend Poland’s embargo on Ukrainian corn, wheat, sunflower, and canola.
Early Tuesday saw another test for the PLN after Prime Minister Mateusz Morawiecki announced that he had formally requested that the European Commission, the executive arm of the European Union (EU), extend current restrictions on the volume of Ukrainian agricultural products that are allowed to cross the border into Poland.
The ruling Law & Justice party of Poland, a far-right ultra-nationalist party, is courting the farm vote ahead of the general election due to begin October 15th. Prime Minister Mateusz Morawiecki declared on the app formerly known as Twitter that, “Poland will not allow Ukraine grain to flood us”. The Polish Prime Minister telegraphed that Poland would continue to keep grain at the border regardless of the Commission’s decision, continuing on the social media app, “Regardless of the decisions of the clerks in Brussels, we will not open up our borders.”
Poland and several other regional neighbors all agreed on an EU embargo on grains produced by Kyiv from April until September 15th in an effort to prevent knock-on market effects on their farmers. Russia’s blockade on Ukrainian exports has left Ukraine with more grains than its domestic market can absorb.
EU Agriculture Commissioner Janusz Wojciechowski, who is Poland’s former agriculture minister, announced on Tuesday that he was actively trying to extend the embargo.
Ukraine grains threaten Poland, says Polish Prime Minister
Ukraine’s Prime Minister Denys Shmygal has threatened legal action on the ban extension, citing potential violations of the General Agreement on Tariffs and Trade (GATT). The Prime Minister declared that Kyiv will seek World Trade Organization (WTO) arbitration to recover losses, citing that the embargo extension represents “political populism before the (Polish) elections”.
The Polish Zloty knocked lower on news of the agriculture spat, and the PLN is on pace for its biggest single-month decline since September of last year. The end of 2022 saw the PLN hit record historical lows, with a single Greenback (USD) able to purchase over 5 Zloty at the peak.
The grains groans follow closely on the heels of Poland’s recent Zloty headaches, sparked by an unexpected rate cut from the Polish National Bank (PNB). PNB Governor Adam Glapiński gave a surprise 0.75% rate cut despite inflation still clearing 10% in the Polish economy.
PNB Governor Adam Glapiński has come under fire for the move, being accused on multiple fronts of politically motivated banking policies. Glapiński, an open supporter of the Law & Justice party, has been accused of trying to bolster political support ahead of the general election next month by reducing borrowing and lending rates at the future expense of the domestic economy.
Further reading: Zloty crumbles on the back of PNB rate cut, inflation still over 10%
USD/PLN technical outlook
The Zloty continues to lose ground against the USD, and the USD/PLN pairing was knocked higher on Tuesday, cracking near-term highs around 4.3350. The pair briefly broke through the 4.3800 handle, and the floor is looking very far away. A significant bottom has been priced into July’s swing low near 3.9500, and any downside momentum sees dynamic support rising from a bullish inversion of the 50-day Exponential Moving Average (EMA) and 100-day Simple Moving Average (SMA).
The Zloty is looking incredibly over-extended against the Greenback, but significant macro conditions are breaking the technicals.
USD/PLN daily chart
USD/PLN technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD corrects toward 0.6850, awaits US PCE Price Index
AUD/USD is falling back toward 0.6850 in Friday's Asian trading, reversing from near 19-month peak. A tepid US Dollar bounce drags the pair lower but the downside appears called by the latest Chinese stimulus measures, which boost risk sentiment ahead of US PCE data.
USD/JPY pares gains toward 145.00 after Tokyo CPI inflation data
USD/JPY is paring back gains to head toward 145.00 in the Asian session on Friday, as Tokyo CPI inflation data keep hopes of BoJ rate hikes alive. However, intensifying risk flows on China's policy optimism support the pair's renewed upside. The focus shifts to the US PCE inflation data.
Gold price consolidates below record high as traders await US PCE Price Index
Gold price climbed to a fresh all-time peak on Thursday amid dovish Fed expectations. The USD languished near the YTD low and shrugged off Thursday’s upbeat US data. The upbeat market mood caps the XAU/USD ahead of the key US PCE Price Index.
Avalanche rallies following launch of incentive program for developers
Avalanche announced the launch of Retro9000 on Thursday as part of its larger Avalanche9000 upgrade. Retro9000 is a program designed to support developers with up to $40 million in grants for building on the Avalanche testnet.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.