Oil prices, Iran uncertainty and rate expectations added to pressure on Polish assets. The euro briefly rose by about 12 groszy against the Polish złoty on Thursday, pushing the złoty to its weakest level against the single currency since late 2023. On Thursday morning, one euro cost around PLN 4.377, but by about 11 a.m. it had climbed to just above PLN 4.40. It then fell back almost as quickly, slipping below PLN 4.379 by 2:30 p.m. The common currency’s peak was its highest since November 2023, when the euro traded at PLN 4.42. The Polish currency also weakened against the US dollar, British pound and Swiss franc, although less dramatically. Analysts attributed the złoty’s volatility to global geopolitical uncertainty and higher crude-oil prices. “Markets are still being influenced by global factors,” Bank Millennium wrote in a market commentary. “The lack of details about progress in talks between the US and Iran is conducive to global geopolitical premiums being maintained. “Overnight, the price of a barrel of Brent crude returned to the vicinity of $104,” the bank said. “Under these conditions, pressure for a strong dollar and higher yields persists. These factors are unfavorable for the złoty and the valuation of Polish debt.” Interest rates and GDP A strategist at PKO BP, Poland’s largest bank by assets, told state news agency PAP that monetary policy, macroeconomic trends and lower GDP forecasts were also factors. “For the time being, our central bank is not signaling a need for interest rate hikes, which is also weighing on our currency,” Mirosław Budzicki said. “Moreover, market uncertainty is causing economic activity in Poland to be lower than previously forecast. GDP growth projections for Poland are being revised downwards, which is also affecting the currency.” High yields on bonds in major markets, including 10-year US Treasury securities, also make Polish government bonds relatively less attractive to investors, Budzicki said, adding that Russia’s increasingly confrontational behavior was not helping the złoty. The PKO BP analyst struck an optimistic note, however, predicting that the euro would fall below PLN 4.35 by year-end, with “the złoty’s appreciation likely to be even more pronounced against the dollar.”
