EUR/PLN likely to remain on weaker side of 4.30 in H2 2019

Appreciation potential of the Polish zloty might be restricted by global factors, according to an Erste Group Research report. For nearly one year, the EUR/PLN pair has remained in a narrow range around 4.30. The strengthening of the Polish currency is not underpinned by the domestic factors.

GDP is expected to sustain strong growth momentum while inflation continues to be under control. Therefore, stability of rates is the most likely scenario in 2019 and 2020. Global factors are expected to play a bigger role in shaping EUR/PLN development. Higher overall risk for the EU restricts the appreciation potential of the euro and fabors slight strengthening of the US dollar. Therefore, the EUR/PLN might stay on the weaker side of 4.30 in the second half of 2019.

“In the long run, we expect the zloty to weaken in 2H19 due to the hard Brexit risk. Next year, we expect the zloty to somewhat appreciate towards 4.29, conditional on no major changes in local and global developments”, added Erste Group Research.