Outlook
Polish zloty faces a cautious path near term. Growth prospects and EU funds support may help lift the currency, but political gridlock and the excessive deficit procedure cap upside. The NBP has paused rate cuts since October 2023, maintaining a hawkish stance, which adds resilience to the zloty but keeps policy uncertainty in play.
Key drivers
- NBP policy stance: A pause on rate cuts since October 2023 with a hawkish tilt due to inflation concerns keeps the zloty supported on fundamentals but vulnerable to surprises in inflation data or policy signaling.
- Economic momentum: Poland’s economy is projected to grow over 3.5% in 2026, backed by EU funds and solid fundamentals, which could support the zloty.
- Fiscal and political risk: The excessive deficit procedure identified by the European Council and ongoing political gridlock after Nawrocki’s election may weigh on fiscal policy and zloty stability.
- External support: EU funds inflows and improving domestic demand help underpin PLN resilience, even as policy and political uncertainties persist.
Range
PLN to USD: 0.2863 current, about 3.7% above the 3-month average of 0.2762, with a 3-month trading range of 0.2694 to 0.2867.
PLN to EUR: 0.2383 current, near 90-day highs and about 0.7% above the 3-month average of 0.2367, within a 0.2339 to 0.2383 range.
PLN to GBP: 0.2071 current, near its 3-month average, within a 0.2052 to 0.2089 range.
PLN to JPY: 43.66 current, about 1.4% above the 3-month average of 43.06, within a 41.39 to 44.33 range.
What could change it
- Policy shifts: A surprising move by the NBP (e.g., backward steps on tightening or faster tightening) could alter the trajectory for all PLN pairs.
- Fiscal developments: Progress or resolution in the excessive deficit procedure and related fiscal policy decisions could provide clearer direction for PLN strength or weakness.
- Political dynamics: Resolution of gridlock or unexpected policy announcements could swing sentiment toward stability or risk.
- EU funding flow: Accelerated or delayed EU fund disbursements could shift domestic demand and PLN performance.
- Global risk mood: Shifts in global risk appetite or USD strength can directly impact PLN through liquidity and capital flows.
