In the case of the exchange rates of the Polish zloty, the year 2014 began with a rapid depreciation of the Polish zloty due to the concern of the global financial markets about the effects of the gradual reduction in the quantitative expansion by the Fed for the emerging markets.
In 2014, the main factors which determined changes on the foreign exchange market were as follows:
- the gradual extinction of the quantitative expansion of the U.S. central bank (the Fed) in conjunction with signals regarding the prospects of increasing interest rates,
- the ECB easing its monetary policy: conventionally (reductions in interest rates) and unconventionally (quantitative expansion),
- the deflationary pressure and reductions in the basic interest rate in Poland from 2.50% to 2.0%,
- the economic slow-down on the emerging markets and the conflict in Ukraine.
In 2014, the exchange rate of the euro against the dollar was determined first of all by the growing divergence of the monetary policies in the euro area and the USA. The easing of the monetary policy in the euro area and the gradual discontinuation of the quantitative expansion in the USA along with the rising expectations for interest rate increases in that country caused a strong depreciation of the exchange rate of the euro against the dollar which decreased from approx. 1.37 as at the end of 2013 to approx. 1.23 as at the end of 2014.
In the case of the exchange rates of the Polish zloty, the year 2014 began with a rapid depreciation of the Polish zloty due to the concern of the global financial markets about the effects of the gradual reduction in the quantitative expansion by the Fed for the emerging markets. However, this concern was quickly dispelled, which resulted in the gradual appreciation of the Polish zloty which lasted up until mid-2014, being periodically interrupted only in March and April by such events as the annexation of Crimea by Russia and the commencement of hostilities in eastern Ukraine. Since mid-2014 in step with the growing desinflationary pressure in Poland, which resulted in increased expectations for a reduction in interest rates, the gradual deterioration of the economic situation in China and in close proximity of Poland (Ukraine, Russia), as well as the rising expectations for interest rate increases in the USA, the Polish zloty entered a path of gradual depreciation which lasted up until the end of 2014. At the end of the year, the EUR/PLN exchange rate amounted to approx. 4.29 (up from approx. 4.15 at the beginning of the year), and the CHF/PLN exchange rate amounted to approx. 3.56 (up from approx. 3.38 at the beginning of the year).