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Daily analysis 06.05.2015

, author:

Piotr Lonczak

Greece stiffens its attitude on the last stage of negotiations. The markets are more concerned with information from Athens than the euro. The zloty becomes a victim of increased aversion towards hazardous assets.

Greece returns to its aggressive rhetoric at a crucial moment of the negotiations. Yesterday, one of the Greek government's representatives said, that an agreement will not be possible, if the European Commission and the International Monetary Fund will not abandon their unrealisitic demands concerning the reform.

It was earlier said, that the most important argumentative matters are the reforms of the pension system and the labour market. The Syriza government does not want to compromise in many matters including the increase of the minimum wage.

Citing an anonymous source from the Greek government, Reuters informed that Athens have settled their interest to the International Monetary Fund, today. However, it was not a big problem – the payment was approximately 200 million euro. The more serious problem will be settling a significantly bigger payment on 12th of May, which will amount to over 700 million euro.

The settlement will occur one day after the summit of the eurogroup, which will decide whether to give money to Greece. Considering the comments of the Greek politicians, and a grim evaluation of the German minister of finance, Wolfgang Schaeble, the chance for a happy ending of those negotiations is relatively slim.

The EBC pressure

Today, the European Central Bank will decide whether to limit the liquidity access to the Greek banks or not.

The EBC will evaluate whether it is necessary to increase the discounts for securities provided by the Greek banks. Additionally, the Bank will review the limit within the emergency providing of liquidity. This instrument is the most important source of liquidity for the Greek sector, thanks to which the government of Alexis Tsipras has money to function normally.

The steps undertaken by the EBC are another means to force Athens to bend under the pressure of Troika's expectations. On the other hand, the European Commission decreased their prognoses for the Greek economy yesterday. This shows that the current policy of Athens is not advantageous. The increase of GDP in 2015, will amount to only 0.5 percent – it is definitely lower than the previously anticipated 2.5 percent.

The euro did not mind the disturbance concerning Greece too much. The currency took advantage of the dollar's weakness, after the publication about foreign trade. One can however observe more anxieties on the Greek financial market and the European stock markets.

The zloty becomes a victim of uncertainty

Very weak data about the American trade deficit, were a very positive impulse for the Polish currency yesterday. The report indicated that the effect of a stronger dollar is an increase of import, and it does not harm the export so much. However, the deficit was approximately 10 billion dollars higher than expected. As a result, the report influenced on the expectation about raising interest rates by the Federal Reserve in the more distant part of the year 2015.

Such a situation serves the hazardous assets well, which also include the zloty. Also, the Polish currency received some help from better prognoses of the European Commission – economy of the EU, the eurozone, and also the Polish economy are expected to gain better results.

Today, however, the zloty was a victim of the return of uncertainty. Due to Greece’s more aggressive attitude, a scenario of this country's insolvency is reborn. Although such a solution would not be a big strike for the Polish economy, it would be an impulse for the zloty's wear off. Overall, tomorrow's elections in the United Kingdom are also a source of uncertainty. They can result in the return of speculations, about this country leaving the European Union.

In this context, today's summit of the Monetary Policy Council will not have a bigger influence on the Polish currency. It is in a greater degree affected by the sentiment on a wider market. The zloty has been mostly overvalued in relation to the euro and franc.


This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without the written permission from Cinkciarz.pl Sp. z o.o is prohibited.

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