EUR/PLN to drift down to around 4.65 by end-2023 – Commerzbank

Thanks to its high beta, the Zloty should benefit from a stronger euro in 2023. However, the conflict with the EU and a hesitant central bank remain PLN-negative arguments pointing towards rising EUR/PLN rates in 2024, economists at Commerzbank report.

EUR/PLN to rise again towards 4.85 in 2024

“We forecast the Euro to appreciate further through the rest of 2023, but weaken once again during 2024. Given the Zloty’s high-beta relationship to the Euro, we see EUR/PLN drifting down to around 4.65 by the end of 2023 as inflation moderates globally, which will alter perceptions about Poland’s negative real interest rate.” 

“In 2024, we forecast EUR/PLN to rise again towards 4.85 as inflation will likely remain stubbornly above target.”

“Inflation data now seem to support the doves and afford the central bank the luxury to continue with a negative real interest rate. But eventually, inflation may not moderate back to target easily, hence we see 2024 as a potential Zloty-negative period.”

“Another driver of volatility: the EC has stepped up its rule of law mechanism on Poland and Hungary, which demonstrates the broader risk of frequent EU disputes and delay of funding.”