The Polish zloty performed better than other regional currencies in 2024. It continued to strengthen after the October depreciation, surpassing its recent highs. In January, the EUR/PLN rate fell to its lowest level in almost seven years, reaching 4.20, and continued to appreciate in February. The USD/PLN pair has seen more volatility, in part due to Trump’s presidential election victory.
Key points:
– The EUR/PLN rate is at its lowest since 2018.
– The zloty is bolstered by the hawkish Polish National Bank (NBP).
– We expect a return to interest rate cuts in 2025.
– In the medium term, the PLN could be one of the strongest EM currencies.
– Growth should accelerate and be more balanced.
– International news can cause volatility and occasional challenges for the PLN.
– The end of the Russia-Ukraine war can improve sentiments towards the region and the PLN.
We believe the zloty’s revival following the shocks of the pandemic and the Russia-Ukraine war has effectively come to an end. The currency has experienced a strong appreciation over the last two and a half years, increasing by approximately 20%, to its highest level since the 2008 financial crisis.
The relative resilience of the zloty can be associated with the normalization of the Polish economy. Key elements such as the balance of payments situation, economic activity and inflation have returned to a “natural state”. The economic situation will likely be further strengthened in the coming years, supported by a large absorption of EU funds. Nevertheless, economic stagnation in Europe and threats of American tariffs suggest that Polish exports will remain subdued.
In our estimation, within our forecast horizon, the zloty is set to outperform the other emerging market currencies. We currently anticipate an EUR/PLN rate close to 4.25 in 2025 and 2026. Poland’s strong partnership with the US, limited ties with China, lack of commodity dependence, and healthy fundamentals make the zloty well-equipped for Trump’s second term. The economic prospects are favorable and ongoing high-interest rates along with solid fundamentals should support the zloty.
This year, Poland will hold presidential elections. Investors welcomed the results of the parliamentary elections in 2023, viewing the new government as more liberal and a promise of warming relations with the EU. The victory of the frontrunner, Rafał Trzaskowski, in this year’s elections would enable better cooperation between the government and the president, which may be preferred by investors, this however seems to be largely factored into the market valuation already.
Source: https://ceo.com.pl/kurs-euro-i-dolara-w-relacji-do-zlotego-czego-oczekiwac-w-2025-i-2026-roku-56730
