The Polish Zloty (PLN) has come under pressure against the Euro following a dovish tone from the National Bank of Poland (NBP) during its recent press conference, according to ING strategist Frantisek Taborsky [1]. The market is currently pricing in almost a full rate cut, with more than a 50% probability assigned to a cut at the September meeting [1]. ING’s models suggest the EUR/PLN exchange rate could move closer to 4.340, with upside risk remaining [1].
Despite the recent sharp weakening of the Zloty, ING maintains a bearish outlook on PLN for the week and beyond, citing both the dovish NBP stance and risk-off sentiment stemming from weekend headlines in the Middle East, which are expected to add further pressure across Central and Eastern European (CEE) currencies [1].
In contrast, ING remains constructive on the Czech Koruna and Hungarian Forint, supported by a hawkish Czech National Bank and a recovering Forint amid a solid domestic backdrop, although near-term weakness across CEE foreign exchange markets is anticipated [1].
Overall, the dovish policy expectations and market pricing of future rate cuts are seen as the main drivers weighing on the Zloty, while regional peers may fare better due to differing central bank stances and domestic conditions [1].
CONCLUSION
The Polish Zloty faces ongoing pressure due to the National Bank of Poland's dovish stance and market expectations for a rate cut, with ING projecting further weakness. While the Koruna and Forint may show relative resilience, near-term volatility is expected across Central and Eastern European currencies.