Daily outlook for PLN: Commerzbank

Quotes from Commerzbank Corporates & Markets:

-PLN: Alongside other CE3 currencies, the zloty has benefitted from a stable EUR environment in recent weeks, with EUR-PLN falling by 3% from 4.29 at the beginning of the year to 4.16 yesterday. Nevertheless, the zloty in particular could see its fortunes reverse soon as it appears that rates are set to be cut at next week's MPC meeting: we forecast a 25bps rate cut on 4 March to re-open the "paused" easing cycle.

-For this to occur though, we need one of two possible swing voters -- Mr Hausner or Ms Chojna-Duch -- to vote for a cut; based on latest remarks, it appears that both will vote for easing because of the worsening deflation in recent months.

-Ms Chojna-Duch in particular has remarked that she may follow the lead of Governor Belka in next month's voting; and we know that Mr Belka is keen for lower rates, although he also reminded the market on 19 Feb that he sees only limited room to cut rates. We foresee 50bps total easing by Q2 as base-case, which is likely to put mild downward pressure on EUR-PLN in coming months.