A possible break-up of Poland’s largest opposition party would not necessarily be good news for the Polish zloty, according to Commerzbank analysts. Although a weaker Law and Justice party could initially be interpreted as reducing political risk, the bank warns that fragmentation on the right may produce several very different electoral and coalition scenarios.
The growing conflict within Law and Justice, known by its Polish abbreviation PiS, has attracted the attention not only of political commentators but also of currency strategists.
Commerzbank analysts have cautioned against assuming that a formal split between the party leadership and politicians associated with former prime minister Mateusz Morawiecki would automatically support the Polish currency.
The first market reaction could theoretically be positive. A divided PiS would have a smaller chance of independently returning to power after the parliamentary election expected in 2027. For some investors, that could reduce the likelihood of another period of confrontation with European Union institutions and uncertainty over Poland’s economic and institutional policies.
However, Commerzbank argues that this is only one of several possible outcomes. The ultimate impact on the zloty will depend on how the political conflict develops, how voters respond and whether the competing conservative groups decide to cooperate again after the election.
A weaker PiS could initially reduce political risk
Currency markets tend to favour political stability, predictable economic policy and governments capable of maintaining constructive relations with European institutions.
From this perspective, a major split within PiS could initially be viewed as reducing the probability of the party returning to power on its own.
PiS governed Poland between 2015 and 2023. Its time in office was marked by disputes with the European Commission over the judiciary, the rule of law and access to European funds. Those conflicts periodically contributed to a higher political risk premium attached to Polish assets.
A weaker PiS could therefore be interpreted by some investors as lowering the likelihood of renewed confrontation with Brussels.
Such an interpretation would potentially support the zloty, particularly if the current governing parties appeared more likely to retain power after the next election.
Commerzbank analysts nevertheless stress that political fragmentation does not always produce greater stability. In some circumstances, it can create additional uncertainty and make the formation of a future government more difficult.
Morawiecki could compete for moderate centre-right voters
One possible scenario is that politicians associated with Morawiecki create a separate political organisation positioned closer to the economic centre-right.
Morawiecki’s Development Plus association has sought to attract voters interested in economic growth, investment, business development and a more modern conservative platform. Its supporters argue that PiS needs to broaden its appeal beyond its traditional electorate if it wants to defeat Prime Minister Donald Tusk’s governing coalition.
A separate Morawiecki-led formation could compete for entrepreneurs, younger conservative voters and people who support traditional values but are uncomfortable with the increasingly confrontational language used by parts of the Polish right.
At the same time, the remaining PiS leadership could intensify its campaign for more nationalist and socially conservative voters.
Such a strategy could lead to stronger competition between different sections of the right. PiS would have to defend its position not only against Morawiecki’s potential new organisation but also against parties operating further to the right.
From a financial-market perspective, the consequences would be difficult to predict. A moderate conservative party could become an acceptable coalition partner for centrist groups. Alternatively, competition for the right-wing electorate could push all participating parties towards more radical positions.
Former allies could cooperate again after the election
Commerzbank also points out that a party split before an election does not rule out cooperation afterwards.
Even if Morawiecki and his supporters leave PiS and establish their own parliamentary club or political party, both groups could later negotiate a coalition agreement.
They would continue to share many positions on social policy, national sovereignty, security and relations with the European Union. Their current dispute concerns political strategy, leadership and control over the opposition rather than a complete ideological separation.
The creation of two separate electoral lists could even allow the conservative camp to appeal to different groups of voters. PiS could mobilise its traditional base, while Morawiecki’s formation could target more moderate and economically liberal voters.
If both groups crossed the electoral threshold, they could attempt to reunite after the election and form a government together.
This means that a split would not necessarily eliminate the possibility of PiS-linked politicians returning to power. It could instead change the structure of the conservative bloc without fundamentally transforming its ability to build a majority.
Political fragmentation may complicate coalition building
A different scenario would be more problematic for financial markets.
A fragmented right could make it harder to assemble a stable government after the 2027 election. If no large party or established alliance secured a parliamentary majority, smaller and potentially more radical groups could become essential coalition partners.
That could increase uncertainty over economic policy, public finances, relations with the European Union and the direction of institutional reforms.
The zloty could face pressure if investors concluded that the election was likely to produce a weak government dependent on several ideologically diverse parties.
Coalition negotiations could take longer, while disagreements between partners could reduce the government’s ability to adopt budgets, implement reforms or respond to economic shocks.
Markets generally react less to the names of individual parties than to the expected stability and predictability of the next administration. A divided opposition may reduce the strength of PiS, but it may also produce a more complicated parliamentary landscape.
PiS leadership considers expulsions
The immediate dispute concerns politicians linked to the Development Plus association established by Morawiecki.
The PiS Political Committee was scheduled to discuss their status on Tuesday, 28 July. More than 30 parliamentarians were expected to face removal from the party after refusing to leave political associations operating outside official PiS structures.
Morawiecki said that his political camp included 40 members of the Sejm, one senator and three members of the European Parliament.
The former prime minister warned that if his allies were formally expelled from PiS, they would establish their own parliamentary club. Creating such a club would give the group greater organisational independence, access to parliamentary positions and the ability to present itself as a separate political force.
The conflict followed an ultimatum issued by the PiS leadership. Party members were required to resign from organisations conducting political activity outside the party.
Jarosław Kaczyński said that some politicians had deliberately failed to meet the deadline despite knowing the possible consequences.
Morawiecki’s supporters rejected the suggestion that they had voluntarily resigned from PiS. They argued that Development Plus was intended to strengthen the broader conservative camp rather than compete directly with the party.
Two competing strategies for the Polish right
The confrontation reflects a wider disagreement over how the opposition should prepare for the next parliamentary election.
Kaczyński’s supporters emphasise party unity, discipline and the mobilisation of PiS’s traditional electorate. They are concerned that competing organisations could weaken the party, divide its supporters and challenge the authority of its leadership.
Morawiecki’s allies argue that PiS cannot return to power by relying solely on its existing voter base. They want the party to reach younger voters, business owners, professionals and people with moderately conservative views.
Morawiecki has described this approach as a strategy based on “two lungs”, with different parts of the right appealing to different groups while remaining capable of cooperating against Tusk’s government.
The party leadership appears to view this strategy as a potential threat to PiS’s internal cohesion.
The dispute is therefore about more than membership of a political association. It concerns the leadership of the Polish right after Kaczyński, the selection of candidates for the 2027 election and the question of whether PiS should move towards the political centre or compete more aggressively with nationalist parties.
The zloty depends on more than domestic politics
Even a major reorganisation of the Polish political scene would be only one of several factors affecting the zloty.
The currency’s performance also depends on interest-rate expectations, inflation, decisions by the National Bank of Poland, economic growth and the condition of public finances.
Global developments remain equally important. Changes in energy prices, geopolitical tensions, monetary policy in the United States and the eurozone, and investor demand for emerging-market assets can have a stronger short-term influence on the zloty than domestic party politics.
Poland’s access to European funds is another key consideration. Investors closely monitor the government’s relationship with the European Commission because EU financing supports public investment, economic growth and demand for the Polish currency.
Political developments become particularly important when they could affect fiscal policy, central bank independence, institutional stability or Poland’s position within the European Union.
A PiS split would therefore need to be assessed together with changes in polling, potential coalition combinations and the economic programmes presented by the competing parties.
No clear positive signal for the Polish currency
Commerzbank’s conclusion is that it is too early to treat the conflict within PiS as an unequivocally positive development for the zloty.
The division could weaken the largest opposition party and improve the chances of the current governing camp. It could also create a new moderate conservative force attractive to investors.
However, the same process could intensify competition for radical voters, complicate the formation of a future government or lead to a post-election reunion between PiS and Morawiecki’s supporters.
The political conflict is therefore worth monitoring, particularly as new parties, parliamentary clubs and electoral alliances begin to emerge.
For the moment, the implications for the Polish currency remain uncertain. A weaker PiS may reduce one form of political risk while creating another: a more fragmented parliament with less predictable coalition arithmetic.
