PLN likely to strengthen towards 2016-end on strong economic performance

After the elections in October and due to the negative risk sentiment, the PLN depreciated considerably against the EUR in late 2015 and start of 2016. However, in recent months, the EUR/PLN pair has strengthened due the improvement in risk sentiment. But the Polish currency might face certain headwinds when the CHF-conversion bill’s details are published, according to Nordea Bank. Costs still remain high and might restrict banks’ capacity to lend and hence underpin sustained high growth.

Furthermore, the bank asset tax might lead certain banks to shift assets outside the country. Lastly, increased political risks might put off certain inflows of capital, noted Nordea Bank. The PLN is likely to bolster towards the end of 2016 and turn of 2017 because of the solid performance of the economy and high interest rates in comparison to its peers, added Nordea Bank.