A month has passed since the US presidential elections, which significantly strengthened the dollar and weakened the Polish zloty. However, the zloty is slowly making up for the losses. At the moment, we will pay PLN 4.05 for one dollar, and the rate is gradually approaching the PLN 4 boundary. Now, the elections in Germany and political tensions in France will play a more significant role for investors. The presidential elections in Poland will have less impact on the zloty exchange rate, even though the president designates three members of the Monetary Policy Council (RPP).
The last month has seen significant volatility in the currency market. Before the US elections, most analysts predicted that with the start of the cycle of interest rate cuts in the United States, the dollar would weaken. However, the election outcome reversed this trend in the short term. On the eve of the election, and after Donald Trump’s victory was announced, the dollar strengthened, motivated by inflation fears. These stemmed from the pro-inflationary policies of the new president. Concerns were also raised about the introduction of tariffs on goods from various regions of the world and the risk of a trade war. Over the last month, the US Dollar Index, which measures the value of the dollar against a basket of six currencies (EUR, JPY, GBP, CHF, CAD, and SEK), increased by 2.14 percent. From mid-November, the EUR/USD exchange rate has been maintained at around 1.05, which suggests that the market has already accounted for most of these risks.
After the elections in the United States, there was also a capital outflow from emerging markets, which weakened the zloty. This effect, however, is gradually fading: now, we observe the opposite trend. Currently, we pay PLN 4.27 for 1 euro, which means that over the month, our currency gained about 2 percent against the euro. The dollar, however, costs PLN 4.05, and the zloty weakened against it by 1.2 percent in the same period.
At the last meeting, the Monetary Policy Council (RPP) decided to maintain interest rates at the current level, which favoured the further strengthening of the zloty. The Polish currency benefited from two key factors: first, weak economic performance in Europe puts pressure on the euro, which benefits the zloty. Second, the NBP’s “hawkish” monetary policy – including the high level of interest rates – additionally supports the value of the zloty, limiting the increase in the EUR/PLN exchange rate. The upcoming interest rate cuts in the eurozone, planned for December 12 and in the US (December 18), could further strengthen the zloty. Then, it may fall below the level of PLN 4.25 per 1 euro, or the current level of technical support.
Politics and elections will continue to impact currency rates, including in the near future. The US elections, which have shaped currency rates in recent weeks, are giving way to European politics. The elections in Germany will be crucial for the euro, as well as the situation in France, where after a vote of no confidence in the government of Michel Barnier and its fall, investors fear a prolonged period of political uncertainty. This could even lead to further early elections.
In the coming year, we also have presidential elections in Poland, although their impact on the zloty rate seems limited for now. It is worth mentioning, however, that the president appoints three members of the Monetary Policy Council, which in turn affects the shaping of monetary policy. The new president nominates the first member of the RPP in December 2025, and the next two – in 2028.
Author: Paweł Majtkowski, eToro analyst in Poland
Source: https://ceo.com.pl/polityka-i-gospodarka-w-grze-co-dalej-z-kursem-zlotego-wobec-dolara-i-euro-71233
