The zloty, which has weakened against the euro by 1.8% since the beginning of the year, will continue to lose value. At the end of the quarter, one will have to pay PLN 4.9 for the euro, according to Lukas Kovanda, chief analyst at ProStream, a currency exchange platform for SMEs. Today before noon, the euro paid about PLN 4.79 on the market.
Last week it was enough to pay less than five Czech crowns for one zloty. This is the lowest exchange rate in history. According to Kovanda, chief analyst at ProStream, the relationship between the zloty and the Czech koruna illustrates a broader problem facing the Polish currency.
“The National Bank of Poland has not changed interest rates since the beginning of September last year. Only two countries in Europe have kept rates unchanged longer than Poland: Ukraine and the Czech Republic. However, while the Czech Republic has seen a decline in core inflation, Poland shows no signs of falling prices,” Kovanda pointed out.
According to him, high inflation combined with a lack of active monetary policy is a dangerous combination for our currency. The analyst considers it illusory to believe that Poland, as the only country in the European Union, has miraculously quelled inflation and can afford to hold off on raising interest rates. December Eurostat data seem to confirm this thesis. It is true that in Hungary, the Baltics and the Czech Republic inflation is higher than in Poland, but the foreign exchange market takes a completely different view of the situation, as evidenced by the drop in the zloty’s exchange rate. Since the beginning of the year, the zloty has weakened against the euro by 1.8%, while the Czech koruna has strengthened by exactly the same amount – 1.8%. The forint went up even higher, by 3.2%, the chief analyst mentioned.
“The central bank’s reluctance to raise rates will continue to weaken the zloty. Especially since President Andrzej Duda announced last Friday that he had sent the Supreme Court law to the Constitutional Court. In the short term, this decision blocks Poland’s access to PLN 35 billion in EU aid.” – Kovanda stressed.
He believes that there is a high probability that the zloty will weaken against the euro to PLN 4.9 at the end of March. It will strengthen slightly in the second half of the year, but will return to PLN 4.9 at the end of 2023.
“This would mean that the zloty will weaken against the euro to the lowest level since the beginning of the COVID-19 pandemic in March 2020,” Kovanda concluded.
The Prostream platform, which offers currency exchange and transfer services for companies, is part of the Czech financial group SAB Finance, a leader in foreign exchange in the Czech Republic. It has been operating in Poland since 2022.
Source: Prostream and ISBnews
