It's Official: Buy Złoty!!!

With Greece still swirling around in the toilet, waiting for Germany to scoop them out and pat them down, the Euro is taking a moderate beating. Many economists see the depreciation of the Euro as a moderate-term event; meaning both the Dollar and the Zloty will be gaining ground against it in the immediate future. The US is expected to raise rates from the near-0% it has now before the ECB does, since the Euro Area has to deal with this new crisis. Poland already has higher rates than both the ECB (Euro Area) and the US, so it behooves one to to borrow from the ECB and invest in Poland. You borrow money for almost nothing, and get a higher return.

In a previous post, I commented how the weakness of the Zloty helped the Polish economy by making Polish goods and services cheaper compared to other countries. I also noted that it was a double-edged sword in that it make imports more expensive (it did: the prices rose by about 30%) especially for energy, namely, oil. Well, I have a two points to make concerning the Zloty's weakness.

I forgot to add that while the Zloty was weaker, making energy more expensive, energy prices themselves were falling rapidly. Oil dropped from $147/barrel to almost $30 faster than you could say "Well, fuck me!" So, while the Zloty was trading near 2 PLN to the $1 in mid-2008, it dropped to almost 3.50 PLN to the Dollar in early 2009, but also energy prices followed suit, taking care of the difference.

The second point, is based on Poland as a brand. Let's face it, Poland isn't exactly known for the quality of its products (Belvedere Vodka excluded, which is known as a premium vodka brand in the US.) Countries like China, India, and the Philippines aren't either, while countries like Switzerland, Germany, and Japan are. The point I'm trying to make is that people will buy Polish goods because they are cheap, not because they are expecting quality. People will buy Swiss and German goods (and pay a little extra) because they think they are getting a superior product, especially in the terms of quality. So, until Poland because a known for its high standard of quality, it should have every bit of help it needs to make its goods cheaper, i.e. a weak Zloty.

By the way, I'm looking forward to seeing how this all turns out. If I'm wrong, so what (barely anyone reads this anyway, and I'm sure even fewer actually take my advice to heart.)