EUR/PLN likely to return to 4.25 in medium term

The EUR/PLN is likely to fluctuate wide in the coming year, given the likelihood of volatility in risk sentiment about government policy, noted Commerzbank in a research report. The currency pair is likely to be at a central forecast level of 4.25. The pair has already experienced sharp fluctuations to levels close to 4.5 in January-February. The irregular session of worsening political risk perception is driving these changes, added Commerzbank.

Meanwhile, the ECB’s expansionary monetary policy is expected to inject fresh capital into the CEE region and provide pressure for currency appreciation. Moreover, the rate of EU fund inflows is likely to rebound in 2017.

“We anticipate significant volatility, but we still see EUR-PLN returning back to around 4.25 in the medium-term as policy visibility improves”, said Commerzbank.