Poland’s presidential election has entered its decisive phase, with the outcome likely to significantly impact the valuation of the Polish zloty (PLN). In the first round of voting, held on May 18, Rafał Trzaskowski – backed by the ruling Civic Coalition – came out ahead with 30.8% of the vote. Close behind was Karol Nawrocki, the candidate supported by the opposition Law and Justice (PiS) party, with 29.1%. Such a narrow margin sets the stage for a tense and unpredictable second round on June 1. On Monday, the markets are almost certain to see increased PLN volatility.
For investors, two factors are particularly important. First, Trzaskowski’s result was weaker than pre-election polls suggested, potentially signaling declining voter mobilization for the Civic Coalition and signs of fatigue within the ruling bloc. Second, the result of the second round might not be clear on election night, especially since votes cast abroad are not included in exit polls, possibly delaying the announcement of a winner until Monday.
From a currency market perspective, political uncertainty directly translates into zloty volatility. Investor concerns center on two scenarios. A Nawrocki victory would reintroduce so-called cohabitation – a power split between the government and the president – potentially leading to legislative gridlock and a reform stalemate. This outcome could also strain relations with EU institutions, particularly over rule-of-law disputes and the disbursement of EU recovery funds (KPO).
While the National Bank of Poland (NBP) is, according to constitutional and international standards, an independent institution, markets could worry that a PiS-backed president might expand the party’s influence over the central bank. As a result, investor perceptions of weakened NBP independence could fuel uncertainty around the future path of monetary policy and lead to a higher risk premium in PLN pricing.
Conversely, a Trzaskowski win would preserve alignment between the government and the presidency, raising the chances of unlocking reforms, improving relations with Brussels, and securing EU funding—factors that would theoretically support the zloty. Thus, the presidential runoff is not merely a political contest; it is also a high-stakes event for financial markets that could cause a sharp repricing of PLN assets.
Author: Łukasz Zembik, OANDA TMS Brokers
Source: CEO.com.pl – Full Article
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