What is USD/PLN?
The USD/PLN currency pair represents the exchange rate between the US dollar and Polish zloty, or the number of zlotys (the quote currency) necessary to purchase one dollar (the base currency). The currency pair is volatile and can provide forex traders with diversification opportunities.
The Polish zloty is the country's official currency, and it is issued and managed by the Narodowy Bank Polski (NBP). It was officially introduced to supplant the Polish marka and began circulation in 1924. In 1995, Poland's post-communist government instituted a new zloty at a rate of 10,000 old zlotys to one new zloty in an effort to stimulate the economy. In Central and Eastern Europe, the zloty is the most traded currency.
The US dollar is the world's primary reserve currency and serves as legal tender in several nations, such as Ecuador and the Republic of Zimbabwe. It is also the most widely used currency in the world. Due to the stability and dependability of the US economy, the USD is the currency of choice for international transactions and reserves. In addition, the dominance of the US dollar in international trade has significant implications for exchange rates and economic policies worldwide, and it can serve as a benchmark for nations that choose to establish or peg their currencies to the USD's value.
What affects the price of the USD/PLN pair?
Trade tensions, geopolitical developments, and crises such as the one in Poland's neighbouring country, Ukraine, can have an effect on the zloty and the USD/PLN exchange rate. In times of global unpredictability, investors may seek refuge in the US dollar as a reserve currency, resulting in USD appreciation. During periods of risk aversion, investors may favour higher-yielding assets, which could be advantageous for the PLN.
Additionally, the trade balance between two nations affects the relative value and prospective direction of the currencies. Some of the major US exports to Poland include planes, helicopters, and spacecraft.
The primary exports of Poland to the United States are gas turbines, orthopaedic devices, and furniture. The exports of Poland to the United States have increased consistently over the past quarter century. If Poland exports more goods and services to the United States than it imports (a trade surplus), the PLN may appreciate against the USD as a result of the increased demand for the PLN in trade transactions.
The decisions of central banks regarding interest rates can have a significant effect on the value of a currency. Higher US interest rates could attract foreign investment, thereby bolstering the USD against the zloty. Expect decisions regarding Poland's adoption of the euro to have a significant impact on the zloty's value and future availability as a forex trading instrument.
What to watch out for when trading USD/PLN?
Keep a watch on data releases and statements from influential organisations in the US and Poland when trading USDPLN.
- The National Bank of Poland (NBP) and the US Federal Reserve decisions regarding Interest Rates and Monetary Policy
- US economic data (GDP, Consumer Price Index, Employment Change, Manufacturing/services PMI, consumer sentiment)
- Statistics Poland provides information regarding the Trade Balance, wages, Unemployment Rate, Consumer Price Index (CPI), and Gross Domestic Product (GDP)
- Oil-related market events (OPEC meetings, oil inventory data)
