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Geopolitics Biggest Factor Impacting Polish Foreign Exchange

June 12, 2017

Polish foreign exchange executives say that geopolitics is the biggest issue facing its country and currency this year, according to the results of a Bloomberg FX survey issued today.

More than half (56 percent) of Warsaw FX professionals polled said that the single biggest challenge facing corporations in the country will be navigating geopolitical challenges, while one-quarter say it will be hedging against market volatility. The poll was taken at Bloomberg’s FX17 Summit, which attracted 80 of the leading local FX players, to the event on June 7 in Warsaw.

The most significant issue affecting the Polish currency, the zloty, in 2017, will be political developments between Poland and Europe, said 56 percent of those who responded. The rest of the audience was split, saying that the zloty could be most affected by geopolitics or moves by central banks in the U.S. and Europe.

“The 5 trillion dollar-a-day global FX market is more challenging than ever before,” said Tod Van Name, Bloomberg’s Global Head of FX Electronic Trading. “Currency professionals need new information and tools to help them quickly develop and execute their trading ideas. We brought the Warsaw FX community together to discuss their challenges to see how we may be able to help them.”

Over half of those polled (54 percent) said that they expect the EUR/PLN exchange rate will remain between 4.00 and 4.25 to the end of 2017.  That exchange rate will go higher 34 percent said, while only 13 percent said it would go below 4.00.
To deal with market uncertainties, FX professionals have increased their hedging of the zloty, said 53 percent the audience. The rest said they are either naturally hedged against zloty weakness, choose not to hedge, or do not have the tools to hedge.

What single currency is the safest bet in 2017? Respondents said none and were split between the US dollar (34 percent) and the Japanese yen (25 percent). Very few said they believe in the safety of: the Euro, Chinese yuan, Polish zloty, or British pound.

When asked about their readiness to meet the new European trading rules called MiFID II, which will go into effect in January, more than half (58 percent) said they are ready now or will be by then, but 29 percent said they are not even sure how to get started.

“The complexity and depth of FX regulations keep growing,” said Van Name, adding, “Bloomberg’s dedication to transparency and mastery with data puts us in a perfect position to help clients meet requirements throughout the world.”

The Warsaw event reviewed key regulations such as:

  • MiFID II – Markets in Financial Instruments Directive that requires more detailed reporting from any financial industry doing business with European firms
  • FRTB – Fundamental Review of the Trading Book that calls for standardized methods and models to measure risk
  • PRIIPs – Packaged Retail Insurance-based Investment Products that imposes more pre-contractual disclosure for retail investing

 

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