Zloty Under Pressure as Euro Hits Three-Year High Ahead of Polish Rate Decision

The pressure on Poland’s currency is clear in EUR/PLN: the euro cost PLN 0.20 less at the start of the year, and last traded above PLN 4.41 three years ago. Institutional tensions could bring further pressure, while the Monetary Policy Council and the US election week may reshape the outlook, writes currency analyst Adam Fuchs.

The zloty moves against market sentiment

The first November session has been particularly difficult for the zloty. It is losing ground against the euro and the Swiss franc, with CHF/PLN near 4.81, even though market sentiment is largely favourable to riskier assets.

The dollar is markedly weaker, with EUR/USD noticeably above 1.12. Ten-year bond yields are falling across markets. Still-vague reports of de-escalation in the Middle East have prompted a substantial decline in energy prices: Brent crude is below $109 a barrel for the first time in ten days.

European stock markets are also mostly positive, although gains have faded during the session, with Madrid leading at around 0.6%. Warsaw compares poorly, with WIG20 down 1.2%.

Most significantly for currencies, the zloty is clearly lagging its regional peers. The Hungarian forint is having a particularly strong day, while the Czech koruna is also performing well. The zloty is falling against both, with CZK/PLN above 0.18 for the first time in three years. In Fuchs’s assessment, this points to domestic sources of weakness.

Investors reassess institutional risk

If the weakness has local origins, attention naturally turns to the Constitutional Tribunal on Warsaw’s Szucha Avenue. Fuchs argues that the dispute may have entered a phase in which markets are pricing the risk, at least temporarily. Foreign investors have received a strong signal that the Tribunal has effectively ceased to function normally, with even its leadership disputed.

He describes this as institutional risk to which global capital must pay attention and adjust its exposure. It also deepens disorder in Poland’s legal system, weakening the country’s investment image.

Judicial tensions raise questions about the response from EU institutions. Although the current government has good relations with Brussels, that need not rule out EU consequences. Any threat to access to European funds would weigh on perceptions of Poland’s growth prospects, particularly given its strained budget.

Analysts should also consider whether developments surrounding the Tribunal create additional pressure on Narodowy Bank Polski (NBP), Poland’s central bank, and especially its governor. After Deputy Governor Adam Lipiński’s term ends on November 4, the NBP Management Board will fall below the statutory minimum of six members.

The prime minister returned four presidential nominations without countersigning them in May, while renewed nominations submitted in October still await his decision. Fuchs argues that political decisions, rather than legislation, increasingly define how institutions operate, a picture unlikely to draw capital into Polish assets.

Could the Monetary Policy Council spring a surprise?

Questions about the independence of key state institutions will persist. For the NBP, they are particularly relevant because the Monetary Policy Council, known in Poland as the RPP, begins its meeting on November 3. Is a surprise rate increase on Wednesday, November 4, possible?

The vast majority of analysts expect unchanged rates, but a surprise cannot be entirely excluded. Council members will see the NBP’s latest inflation projection. If it presents a troubling outlook for next year’s price growth while the economy continues to expand at a reasonable pace, a proposal for immediate action could emerge.

Even if it fails to win majority support, a vote on such a proposal would be revealing. The Council should also be watching the zloty’s increasingly pronounced weakness. A weaker currency provides an additional inflation impulse, particularly through more expensive energy commodities, which remain the principal concern.

Currency commentary by Adam Fuchs. Market levels refer to the November 2, 2026 Polish original, rather than live quotations. Original Polish article.