After the parliamentary elections in Poland, the Polish currency rapidly gained in value. The drop in the euro exchange rate reached 10-12 grosz. According to the financial markets strategist at the bank PKO BP, Mirosław Budzicki, such a strengthening of the Polish zloty is due to the anticipated unblocking of funds from the National Reconstruction Programme by investors.

“The election results, in the opinion of investors, bring the prospect of unblocking funds from the National Reconstruction Plan closer and postpone the risk of imposing a blockade on new funds in the new financial perspective”, the expert said.

According to Budzicki, the zloty exchange rate was also influenced by another factor. After the elections, the market began to wonder whether the central bank would loosen monetary policy at the pace expected before the elections in the current situation.

“Investors came to the conclusion that the National Bank of Poland (NBP) will now cut rates more slowly, which can also be seen in the valuations of financial instruments. While before the elections the NBP’s reference rate was expected to fall to its target level of around 4 % in the second half of next year, the market now expects this to happen in the first half of 2025”, added the PKO BP strategist.

Budzicki cautioned that if it turns out that the central bank does not change the pace of interest rate cuts, the market will revise its expectations, and this could have a negative impact on PLN. Especially as global factors are not helping our currency.

Polish currency and Polish assets behaved better than the major world markets at the beginning of the week. However, already on Friday 20 October before midday, almost a week after the elections, the zloty lost around 0.3 % to the euro.

“The further we are from the elections, the more they will have already been discounted and the more strongly investors will take other new risks into account. First, a government will have to emerge, then the stability of this government and the economic policy and so on”, Budzicki said.

Arkadiusz Słomczyński