Key moments

• The Polish zloty briefly strengthened 0.3% to 4.1272 against the euro on Thursday, its highest level since July 2015.
• The zloty subsequently weakened by 0.5% in Warsaw trading, as Eastern European currencies declined due to renewed US tariff concerns.
• Since November 11th, the zloty has appreciated by approximately 5%, ranking among the top-performing emerging-market currencies.

EUR/PLN Peak Was Short-Lived as Pair Weakened by 0.5% in Warsaw Trading

The Polish zloty experienced a notable surge, reaching its highest level against the euro in a decade, before retracting amidst broader market anxieties and growing domestic economic pressures. The currency’s brief ascent to 4.1272 to the euro on Thursday signaled a peak not seen since July 2015. This appreciation, however, was short-lived, as the zloty subsequently lost ground, weakening by 0.5% in Warsaw trading. This reversal occurred in conjunction with a decline in other Eastern European currencies, triggered by renewed apprehensions regarding potential US tariffs, which are creating a climate of uncertainty across global markets.

The zloty’s recent strength has been attributed to market sentiment influenced by central bank statements suggesting that interest rates are likely to remain stable throughout much of 2025. Poland’s decision to maintain its interest rates, unlike other major Eastern European economies, has contributed to this trend, signaling a commitment to controlling inflation. Additionally, expectations of a faster resolution to the conflict in Ukraine have stimulated capital inflows into the region, further bolstering the zloty’s perceived stability.

The zloty’s real effective exchange rate has reached a near 20-year high, prompting concerns from economists about the potential negative impact on the country’s macroeconomic balance, particularly its export competitiveness. The currency’s approximately 5% appreciation since November 11 has positioned it as a leading performer among emerging-market currencies. The zloty trails only the Russian ruble and the Colombian peso, demonstrating a relative resilience in a volatile global economic environment.

The zloty’s strength has raised significant concerns among Polish exporters, particularly in the dairy and furniture sectors. They have voiced their anxieties and called for the central bank to lower interest rates to weaken the currency and alleviate competitive pressures. Finance Minister Andrzej Domanski has also publicly acknowledged the strong zloty as a significant challenge for exporters, citing high local interest rates as a primary contributing factor to the currency’s appreciation. The latest balance-of-payments data indicates a concerning slump in exports as December figures dropped to €24.7 billion, the lowest monthly total since February 2022.

Despite these concerns, the Polish central bank has shown no immediate intention to alter its monetary policy stance. Policymakers remain primarily focused on controlling inflation, which stood at 5.3% in January. They are particularly wary of potential wage growth and energy price pressures that could reignite inflationary trends. The central bank’s governor, Adam Glapinski, has downplayed the significance of the zloty’s strength, stating that it is not among the top concerns for Polish companies. However, the central bank’s own business climate survey has revealed that 14% of exporters have declared profitability issues, suggesting that the currency’s strength is indeed having a tangible impact on certain sectors of the economy.