The euro hasn’t been this cheap for three years. The zloty continues to strengthen

The euro hasn't been this cheap for three years.  The zloty continues to strengthen

The good fortune of the Polish currency continues. The euro has not been this cheap compared to the zloty since March 2020, i.e. the moment when the market confusion caused by the war in Ukraine began.

The zloty is very strong and economists do not expect this to change. The Polish currency has been on an upward trend since the parliamentary elections. It is also supported by macroeconomic data and a change in the narrative of the Monetary Policy Council.

Exchange rates. The euro is the cheapest in three years

The zloty’s climb coincides with the weakening of the world’s most important currencies. Unlike abroad, internal factors, such as the results of the parliamentary elections, are of great importance in Poland.

– A month ago, domestic factors strongly supported the Polish currency, and in recent days the weakening of the dollar has contributed to this. We are now dealing with an outflow of capital from the US currency to assets from emerging markets – Rafał Sadoch, mBank’s FX market analyst, told PAP Biznes.

However, the biggest difference can be seen in the PLN/EUR currency pair. One euro currently costs 4.37, which is the lowest price in three years. We last observed such a rate on March 13, 2020, when there was a sudden weakening of the zloty, caused by the outbreak of the war in Ukraine and the first economic sanctions. According to analysts, exceeding the level of 4.36 may mean that the market will react very positively and the zloty will strengthen even more.

The dollar is very cheap. What will the Federal Reserve do?

The dollar exchange rate is also interesting. Currently, you only have to pay PLN 4.02 for one. The last time the level of PLN 4 was tested was July 21, 2023. The level below PLN 4 was last seen at the end of January 2021.

The strong depreciation of the dollar occurred as a result of poor inflation results in the United States. Economists say this may influence the Federal Reserve’s next decision on the level of interest rates in the US.

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