Deloitte: Poland enters the phase of economic expansion

The divergence of economic moods in Poland...

Two Years On: War in Ukraine and Its Global Impact

On February 24, 2022, a full-scale Russian...

Despite Early Concerns, the Polish Zloty Shows Strength in 2024

ECONOMYDespite Early Concerns, the Polish Zloty Shows Strength in 2024

In January, some analysts predicted a difficult year for the Polish currency. Technically, the charts of major currencies against the PLN approached 13-year support lines. Enthusiasm over the warming relations between Poland and the European Union waned, and the positive impact on the national currency from the receipt of funds from the National Recovery Plan (KPO) faded. Despite this, the zloty has bravely maintained its position in the market, as evidenced by its exchange rates. In mid-May, the EUR/PLN rate fell back below 4.30 PLN, and the “five zloty dollar” has become a thing of the past, with the USD/PLN rate showing a “three” in front. Why is the zloty so strong, and what are the prospects for PLN in the second half of the year?

The Good Streak of the Polish Zloty

The zloty’s offensive is visible both against major currencies (euro, franc, pound, US dollar) and the emerging market currencies of our region (Czech koruna, Romanian leu, Hungarian forint). Anyone calling this a coincidence is mistaken, as the current strength of the PLN is a continuation of a movement that started last year. Thus, it cannot be described as a temporary trend. The current situation of the national currency is the result of many arguments in favor of the zloty.

How Does the Euro Affect PLN?

The first factor is the rise in the world’s main currency pair. The zloty is positively correlated with the euro. This means that the good condition of the euro positively impacts the Polish currency. Two years ago, the euro-dollar exchange rate was at parity, and in the second half of 2022, the EUR/USD rate dropped to 0.95 USD. At that time, the national currency showed weakness, and the poor condition of the euro did not help the zloty. At the time of writing, the popular “edka” is at 1.08 USD, over 10 cents higher than two years ago. For the world’s main currency pair, this is a significant difference, positively impacting the zloty’s position.

The Role of the Monetary Policy Council

A significant factor determining the strength of the currency is the monetary policy conducted by the national bank. This includes not only the decisions themselves but also the communications delivered during press conferences. The May speech by Professor Adam Glapiński was very hawkish. The President of the National Bank of Poland dispelled doubts about a possible interest rate cut this year. This means maintaining high interest rates for at least the next six months, theoretically strengthening the currency. It’s worth noting that this is happening while other central banks in our region, such as the Czech and Hungarian banks, have already started cutting rates several months ago. This explains the zloty’s strength against local currencies in Central and Eastern Europe.

Country Rating

The zloty’s position is also strengthened by Poland’s stable rating from Fitch and S&P, which remained at A- for both long-term and short-term perspectives last Friday. The agencies highlight the diversity and resilience of the Polish economy, additionally pointing to the growth in demand and development (GDP forecast of 2.8% in 2024 and 3.1% in 2025).

PLN is Strong, But Conditions May Change

The zloty’s position on the international stage in mid-May is stable. The national currency is supported by a strong euro, restrictive monetary policy, and optimistic prospects for the next year and a half. If the forecasts come true, we can expect the zloty to strengthen, or at least maintain its strength. Unfortunately, besides the many current advantages, potential threats that could weaken the zloty should be noted. Among them is the possibility of earlier interest rate cuts in the eurozone than in the US, which would theoretically weaken the euro and negatively impact the PLN. Additionally, we must remember that we are still a front-line country, increasing geopolitical risk, which the PLN does not favor. Any escalation of the conflict could negatively affect the rating of the domestic economy and weaken the currency. No one can assure us 100% that interest rates will remain high until the end of the year. In the event of unforeseen events changing economic conditions, the national bank may be forced to change the currently presented scenario of conducting a hawkish monetary policy. Ultimately, it should be noted that the current environment is favorable to the national currency.

Dawid Górny – Analyst at

Check out our other content
Related Articles
The Latest Articles