The recent chart of Euro to Złoty exchange rates may impress and surprise many. This week, we’ve seen daily new lows for several days in a row. This has its consequences for those planning a holiday in Eurozone countries, those earning in the common currency, as well as Polish firms. What influences the strength of the złoty? And what can a strong złoty and cheap euro mean for us?
Golden Valentine’s Day
Undeniably, the Polish currency has become extremely attractive to investors in recent days. “Investors fell in love with the złoty even before Valentine’s Day,” says Adam Fuchs, a currency analyst at Walutomat.pl.
So what might await the Polish currency in the coming days? “The strength of the złoty does not surprise analysts, who increasingly indicate that perhaps this is not the end of its strengthening,” says Krzysztof Pawlak, a currency analyst at Walutomat.pl. Adam Fuchs adds: “A natural behavior after such a violent move would be a correction, which could reverse the Euro rate above 4.20 zł. However, the last few weeks should teach us not to underestimate the market attractiveness of the złoty. If PLN continues to strengthen trend, an important support zone is already close, at around 4.14-4.15 zł. After overcoming this, it will be time for possibly even more important area below 4.10 zł. And at this point, considerations about round 4 zł (seen last decade) might start.”
Advantages of the złoty
The strength of the Polish currency recently has been influenced by several factors, including good forecasts for the Polish economy and the restrictive monetary policy of the Monetary Policy Council. The hopes of ending the conflict at our eastern border also remain significant. “The main factor improving the PLN position is the monetary policy. The European Central Bank continues the cycle of interest rate cuts, which, given the restraint of our local Monetary Policy Council, increases the difference in the cost of money (5.75% Poland and 2.9% Eurozone),” says Adam Fuchs. “Another argument in favor of the złoty is the strength of our economy. International institutions (e.g., OECD and IMF) forecast that in 2025, GDP over the Vistula will rise well above 3%, making our country one of the EU leaders.”
Another factor contributing to the strengthening of the złoty is the hope that the US president will end the conflict in Ukraine. After this week’s Trump-Putin talks, these hopes gained even more weight. “Investors believed in a closer end to the Russian aggression than expected. This won’t obviously be the end of Trump’s electoral campaign, but the fact of ending will be good. It is this perspective that causes capital to flow towards us, and the EURPLN rate momentarily fell below 4.16 zł,” says Maciej Przygórzewski, the chief currency analyst at Walutomat.pl. Krzysztof Pawlak adds: “Such a scenario, on the one hand, is neutralizing a negative geopolitical factor, on the other hand, it provides a chance for Poland to play the role of a leader in helping rebuild the heavily damaged country.”
Good time for vacation?
A strong złoty and cheap Euro have their pros and cons. For those who turn their vacation dreams into reality and choose to rest in Eurozone countries, this is undoubtedly good news. It’s worse for those earning in Euros and sending part of their funds to their loved ones who live in their homeland. And what does cheap Euro mean for Polish firms? “Too strong a currency is difficult for exports, as it increases the final cost of a product. However, on the other hand, export companies often import, so they need to import, e.g., components. Therefore, in the import context, a stronger currency can be helpful. This clearly shows that in the context of global or continental dependencies, it’s hard to see them in black and white,” explains Adam Fuchs.
Source: https://managerplus.pl/kurs-euro-w-dol-czy-doczekamy-sie-4-zl-za-euro-29151
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