Trading Polish Zloty
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The official currency of Poland is the Polish Zloty, represented by the Forex symbol PLN. As a decimal-based currency, each Zloty is divided up into 100 Grosz, and the Zloty is commonly represented by the symbol zł. While it is currently viewed as a regional currency, debates have been taking place recently about whether or not Poland will change its currency to the Euro and become part of the Eurozone. However, at the present time this has not yet happened. The Polish central bank is the Narodowy Bank Polski (NBP), which is responsible for the implementation of monetary policies with the prime goal of maintaining stability in prices. This institution has been directly targeting inflation since 1998 by establishing an acceptable target for inflation rates, which has been set at 2.5% since 2004, with a variance of 1%. The NBP is also responsible for issuing the currency and for acting as a regulatory body for the country’s domestic banks. Most commonly paired with the Euro (EUR/PLN), the Polish Zloty is also often traded with the US Dollar (USD/PLN), the British Pound Sterling (GBP/PLN), the Swiss Franc (CHF/PLN) and the Australian Dollar (AUD/PLN). Several speculators with an interest in trading carry pairs often look to the Polish Zloty as one of their preferred currencies for investment.
History of the Polish Zloty
Over the years, the Polish Zloty, its name being taken from the Polish word “zloto” translating as “golden”, has taken numerous forms and shapes. The Zloty has been in existence in the form of a gold or silver coin since the Middle Ages. However throughout its history, the currency has been modified in many ways to address concerns over stabilising prices and inflation. Poland has always been heavily influenced by its neighbouring countries, and until the late 18th century the Polish Zloty was used alongside several other currencies including Russian Rubles, Austrian Guldens and Prussian Thalers, which were in use in several of its regional districts. The First World War ended this system, and once Poland had established new borders in 1923, the Polish Zloty was set at parity with the Swiss Franc.
The currency has suffered from many chaotic valuations throughout the 20th century as the nation’s sovereignty faced numerous challenges. During both World Wars, the currency suffered from hyperinflation, and there was very little global investment or industry in the country until the 1950s. Over the last 70 years, the currency has been battling against inflation, with every decade seeing a time of prosperity rapidly followed by inflation and devaluation. Since joining the EU in 2004 there has been an ongoing discussion about whether the Euro should be adopted as Poland’s official currency.
Poland’s Economy and its Economic Factors
Poland is still in a period of transition from a post-communist, centralised country into one with a capitalist economy. The GDP (per person) of Poland is below the EU average, and a significant minority of the country’s inhabitants still live below the poverty line. Over 90% of the nation’s economy consists of the industrial and service sectors, and over half of the labour force is employed within the latter, with around 12% of workers being employed in the agricultural industry. Poland’s key industries include steel and iron production, mining, production of chemical fertilisers and shipbuilding. The majority of trading takes place with Germany and Russia as well as other EU nations. Poland’s Warsaw Stock Exchange is the country’s biggest financial marketplace and it is also one of the leading and fastest-growing exchanges on the EME (Emerging Markets Europe) index. The country’s primary imports include goods required for manufacturing and industrial retooling, with its major exports including machinery, foods, furniture, hardwood products, clothing, cosmetics, shoes, light aircraft and motor boats. Popular agricultural exports include fresh and smoked fish, potatoes, dairy products, speciality breads and chocolate.
Factors Affecting the Economy of Poland
As with any economy, levels of international demand for Poland’s exports have a major role to play in the country’s economy and the value of the Polish Zloty, as although Poland is less dependent as a nation upon its external trade than other countries in Central and Eastern Europe, it still relies on a heavy volume of trade with the EU. With coal and iron being two of the country’s major exports, any change in the price of these commodities is likely to influence the value of the currency. Any political unrest in the area must also necessarily impact upon the value of the currency, and volatility in neighbouring Russia will affect the Zloty’s value on the Forex markets, since a large amount of Polish export trade is done with Russia. Another factor that is likely to increasingly impact upon the exchange rate of the currency is any perceived progress towards entering the Eurozone and adopting the Euro as the Polish official currency.