Saturday, August 02, 2008

Polish Currency

If you are considering, long term investment, like one or two months than Polish currency might be interesting for you. For the last year it got stronger and stronger. Just checkout the charts below, this are EUR/PLN and USD/PLN, timeframe 1 year, on both charts you can see what i would call quality trend. Line is at 45 degrees, almost no corrections.


Let's start with EUR/PLN, i won't even talk about technical analysis, indicators and so on, you can see what is happening here. Just draw the line wait for minor correction and get into trade. You maybe wondering.

Ok it went down for a year, won't it turn back? This is a good question, i think this trend can end up pretty soon maybe 3 or 4 months, hard to say really. The problem here is that Polish bussiness has a problem with strong PLN against EUR, because a lot of companies export their products to west Europe. With strong Polish currency, their products are actually more expensive and thus less competetive.

The bottom line is, Polish bussinessmen want this trend to stop, and i believe that government will do what they ask for, the question is when?


Now look at USD/PLN chart it looks almost the same as EUR/PLN, so again i won't go into details how to trade it.
Now to answer the same question as earlier, is this trend here to stay? I think it is, because gas price in Poland pretty much depends on gas price in USA. When gas price in USA gets more expensive it also gets more expensive in Poland (and rest of the world btw).

However, if gas price will go up, but at the same time Polish currency would get stronger against dollar, then it won't affect Poland as much as it would without USD/PLN going down.

Now if i got you interested in this form of investment, you will need a broker, which allows to trade Polish currency or at least EUR/PLN and USD/PLN. As far as i am concerned there are not much brokers who allow this. The ones who do are Oanda and maybe SaxoBank however i am not sure of that.

That is not end of the problems, even if you will find broker who allows to trade this pairs, probably spread on them will be somewhere between 20 and 40 pips, so like i said it is only good to trade them if you are looking for long term investment not scalping or even swing trading.