Polish Zloty: Dovish NBP pressures PLN against Euro – ING

ING strategist Frantisek Taborsky says Central and Eastern European FX will be driven by secondary data and policy expectations. A dovish National Bank of Poland stance and market pricing of future rate cuts are seen weighing on the Zloty, with ING’s models pointing EUR/PLN closer to 4.340. By contrast, ING remains constructive on the Koruna and Forint despite near-term regional weakness.

Zloty lags as koruna and forint supported

"Thursday’s National Bank of Poland press conference struck a clearly dovish tone, which should weigh on the zloty for a bit longer. The market is pricing almost a full rate cut further out, with more than a 50% probability assigned to the September meeting."

"Rates are still searching for a new equilibrium, but the rate differential in our models points closer to 4.340 in EUR/PLN, with upside risk."

"Despite the sharp weakening in recent days, we remain bearish on PLN this week and beyond. Weekend headlines from the Middle East point to a risk-off opening today, which should add pressure across the region."

"We remain bullish on the koruna, backed by a hawkish Czech National Bank, and on the forint, which is recovering from the global sell-off amid a still solid domestic backdrop – but near-term weakness across CEE FX looks likely."