EMEA FX Talking: Zloty weakness looks temporary
The current outlook for the Polish zloty (PLN) suggests that its recent weakness is likely to be temporary. Per the full note from ing-think, the dovish stance of the National Bank of Poland (NBP) has pressured the PLN, with EUR/PLN recently testing the 4.35 mark, its highest level in over 18 months. However, factors such as projected EU fund inflows in the latter half of 2026 and strong GDP growth indicate that underlying fundamentals may not support a sustained depreciation of the zloty. Analysts believe that while the NBP's dovish tone raises the possibility of rate cuts, significant resistance remains to implementing them anytime soon, keeping our forecast for EUR/PLN trending back toward 4.25 for the next year.
What the desk is arguing
The PLN's recent depreciation is viewed as a short-term phenomenon influenced by a softer NBP outlook rather than economic fundamentals. The desk frames this as a transitory condition driven largely by central bank communications, as outlined in the commentary by ing-think.
Furthermore, while the NBP is seen as dovish, expectations for rate cuts may not materialize until 2027, keeping rates stable through 2026. This decouples the PLN's movements from poor economic performance, as Poland anticipates significant EU fund inflows.
Where it sits in our coverage
Currently, we observe that several key firms forecast EUR/PLN movements towards 4.25, aligning closely with our desk's outlook. Notable firm targets include: - jpmorgan: 4.30 by Dec-26 - bofa: 4.20 by Dec-26 - hsbc: 4.25 by Dec-26
This perspective aligns with ing-think's forecasts, suggesting a potential near-term rebound toward the lower end of our estimates while resisting deeper declines in the medium to long term.
How other firms see it
Among the aligned firms, jpmorgan and bofa indicate that while the zloty might face pressures, recovery potential exists through policy stabilization and external fund inflows. Meanwhile, hsbc seems more cautious about the PLN's rebound, highlighting concerns over the broader geopolitical climate.
This debate intersects with EUR/USD trends and ECB monetary policy shifts, particularly as adjustments in European economic outlook could influence PLN movements indirectly, reflecting wider regional confidence.
How firms align with this view
Key takeaways
- 01PLN weakness driven by dovish NBP outlook, likely temporary.
- 02Strong GDP growth and expected EU fund inflows should mitigate long-term depreciation.
- 03Current EUR/PLN level around 4.35 unlikely to hold; target returning to 4.25.
- 04Potential for NBP to delay rate cuts until 2027, supporting PLN stability.
Market implications
Traders should watch the 4.35 resistance level closely for signs of a reversal, as directional moves beyond 4.30 may prompt further volatility. Given the absence of imminent rate changes from the NBP, positions in EUR/PLN could be ripe for adjustment as market perceptions shift.
Risks to this view
If the NBP signals a stronger commitment to rate cuts sooner than expected, this could exacerbate PLN weakness. Additionally, unforeseen geopolitical tensions or economic data that significantly disappoint could lead to a reassessment of the zloty's fundamentals.
Articles EMEA FX Talking: Zloty weakness looks temporary Published 13:04 FX Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download In the CEE space, the Polish zloty has been hit by a dovish National Bank of Poland. Yet the Polish authorities have plenty of firepower to resist zloty weakness, and we see EUR/PLN heading back to 4.25. Elsewhere, expect the Czech koruna and Hungarian forint to stay supported on local stories, while the Turkish lira should continue to attract carry inflows Rafal Benecki , Peter Virovacz , David Havrlant , Mateusz Sutowicz , Dmitry Dolgin and Chris Turner The Polish zloty has been surprisingly weak EUR/PLN: Dovish outlier NBP weighs on zloty Spot One month bias 1M 3M 6M 12M EUR/PLN 4.332 Neutral 4.34 4.28 4.25 4.25 EUR/PLN is testing the 4.35/€ area and has reached a more than 18-month high as the Polish central bank has adopted a clearer dovish tone.
The NBP Governor has not ruled out a 25bp rate cut after the summer. In our view, however, securing a sufficient majority for this move may prove difficult, and we see stable rates in 2026. Cuts are possible in 2027.
Poland is expecting significant inflows of EU funds in 2H26, GDP is outperforming the rest of the region/eurozone and may even accelerate, so PLN weakness is not driven by fundamentals. So far, EU fund-related FX conversions have been limited, and the NBP has expressed little concern about the zloty’s underperformance, encouraging its use as the short leg in CEE FX crosses. EUR/HUF: Forint’s honeymoon period turns into lasting affair Spot One month bias 1M 3M 6M 12M EUR/HUF 356.42 Neutral 355.00 360.00 350.00 355.00 The continued decrease in risk premia, the stabilisation of the forint and low inflation led to a 25bp rate cut in June.
Based on the new forward guidance revealed by the central bank, this will probably be followed by two more cuts. The official commitment to reducing rates has resulted in further monetary easing being priced in. Investors now expect the base rate to be around 5.00% by the end of 2026.
Given the geopolitical climate, it is difficult to predict anything. But, if inflation remains low in 2H27 as we expect, HUF is unlikely to be hit hard by the fall in real interest rates - especially if EU funds flow in and the medium-term fiscal plan is convincing. EUR/CZK: Koruna enjoys a solid interest rate buffer Spot One month bias 1M 3M 6M 12M EUR/CZK 24.26 Mildly Bearish 24.20 24.20 24.15 24.05 We see the koruna remaining stable over the coming months.
But should geopolitical hostilities escalate, the currency would likely come under some pressure. An unchanged Czech National Bank policy rate is the most likely scenario for the foreseeable future. Even if the ECB hikes rates again, the interest rate differential would likely remain above 1ppt in nominal terms and above 2ppt in real terms.
Together with the Czech economy’s relative outperformance in real growth terms, this should allow the koruna to resume its appreciation trend, once the current bout of geopolitical turmoil eases. EUR/RSD: Central bank priorities FX stability Spot One month bias 1M 3M 6M 12M EUR/RSD 117.41 Mildly Bearish 117.35 117.30 117.28 117.25 EUR/RSD has remained mostly flat in a 117.30 – 117.50 range. The key developments have been political, where President Vucic has stated that early elections should be held in the autumn, while progress has also been made on the NIS refinery situation.
On the latter, Serbia and Hungary’s MOL have signed an agreement. Approval from the US Office of Foreign Assets Control remains one of the key conditions for completing the transaction. On macro, strong investments and solid wage growth continue to provide tailwinds for activity.
At its July meeting, the National Bank of Serbia kept the key rate in place at 5.75%, signalling a still-cautious monetary policy stance. FX stability should remain a key focus ahead – in Jan-March, the Bank sold EUR 1.160mn to keep the pair stable. USD/UAH: Hryvnia at all-time highs against the dollar Spot One month bias 1M 3M 6M 12M USD/UAH 44.63 Neutral 44.60 44.70 44.80 44.80 Global dollar strength over recent months pushed USD/UAH towards 45,0 – an all-time high.
The National Bank of Ukraine is fighting the move. In 1H 2026, it sold over US$23bn in FX, of which US$5.2 billion was in June. The outlook for the hryvnia remains cloudy.
In late June, Ukraine received US$6.8bn from the EU, including the first tranches from its €90bn Ukraine Support Loan. The country also received US$4.5bn via World Bank accounts. Although the NBU’s international reserves increased to US$51.3bn in June, the pressure on the hryvnia has remained significant.
On June 17, the NBU decided to keep interest rates unchanged, with the key policy rate at 15.0%. The macroeconomic environment remains challenging due to the Russian war but relations with US have improved recently. USD/KZT: Less support from state FX flows warrants attention Spot One month bias 1M 3M 6M 12M USD/KZT 477.06 Neutral 475.00 480.00 485.00 485.00 Tenge’s continued strength was interrupted recently by the abolishing of the mandatory sales of 50% of FX proceeds by the quasi-public corporates.
The fundamental impact of this measure is likely to be limited, but the broader decline of state support for the tenge is more important, favouring our view on limited scope for appreciation under current global assumptions The tenge remains resilient thanks to high real rates and portfolio inflows. But the reduction in state FX support argues against material room for appreciation. We expect USD/KZT to remain in the 475-500 range over the coming 12 months.
USD/UZS: Local FX market shows resilience to gold prices Spot One month bias 1M 3M 6M 12M 12088.00 Neutral 12000.00 12100.00 12150.00 12350.00 The soum remained virtually flat over the last month, at around 12,000 per USD. As expected, the continued weakness in gold prices had little effect on the currency. The recent external trade data implies gold exports were put on hold in May again after a brief restart in April.
Meanwhile, multi-month pauses are not typical. Portfolio inflows into Uzbekistan should be supported by the continuous rating upgrades, most recently by Moody’s to Ba2 amid material improvement in the consolidated fiscal deficit (to 1.2% GDP as of 4 quarters ending in March-26), according to our estimates. USD/TRY: Capital inflows resume in Turkey Spot One month bias 1M 3M 6M 12M USD/TRY 47.00 Mildly Bullish 47.50 49.50 53.00 57.30 July inflation resumed its annual decline, but underlying inflation momentum improved only modestly, highlighting ongoing disinflation challenges.
However, if geopolitical risks subside, and oil prices remain contained, this should support the inflation outlook. Following the US-Iran agreement, the Central Bank of Turkey accelerated its FX purchases, with cumulative purchases exceeding US$20bn between early June and early July. Reserve accumulation is expected to continue in the near term, supported by potential capital inflows and seasonal improvement in the current account balance.
The CBT is likely to relax liquidity conditions in July, potentially after the MPC meeting, lowering the effective funding rate from 40% to 37%. A move to 35% could be seen in 4Q26. USD/ZAR: SARB might need to hike again Spot One month bias 1M 3M 6M 12M USD/ZAR 16.36 Mildly Bullish 16.50 16.40 16.25 16.00 USD/ZAR continues to trade in a very tight range, although the rand is a little under pressure.
Investors had been positioning for a summer of low volatility and had been attracted by the rand’s 7% yields. Depending on how high oil jumps now, and what that does to short term rates, volatility and global risk sentiment, the rand might come under a little more pressure. As we wrote last month, the SARB says it is prepared to hike to 7.75% in an adverse environment.
The policy rate is 7.00% now and the next meeting is on 23 July. Another rate hike cannot be ruled out and would be rand supportive. But a heavy El Nino this November-February, causing drought in Asia and Africa, could be a major rand negative.
USD/ILS: Bank of Israel turns the shekel tide Spot One month bias 1M 3M 6M 12M USD/ILS 3.0201 Mildly Bullish 3.05 3.00 3.00 3.05 We had felt that the Bank of Israel did not want USD/ILS under 3.00 earlier this year and it has now cut rates 50bp (to 3.50%) and intervened over the last two months (buying $2bn) to turn the bearish USD/ILS trend around. The market now expects the BoI to follow up with further rate cuts, and prices the policy rate as low as 2.00% into 2027. If we are right with our dollar call, the BoI might need to intervene more later this year – though a steady easing cycle should take some upside pressure of the shekel.
The shekel is also tied to the fortunes of the tech sector. Given this positive correlation, any AI-led equity correction could also lift USD/ILS. Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives.
The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Rafal Benecki Chief Economist, Poland Rafal Benecki is a Chief Economist at ING in Poland, joining in 2005. Prior to this, he was the head of the Economic Analysis Bureau at Millennium Bank in Warsaw.
He has an MSc in Financial… Peter Virovacz Senior Economist, Hungary Peter Virovacz is a Senior Economist in Hungary, joining ING in 2016. Prior to that, he has worked at Szazadveg Economic Research Institute and the Fiscal Council of Hungary. Peter studied at the… David Havrlant Chief Economist, Czech Republic David joined ING in 2024 as Chief Economist for the Czech Republic.
He gained professional experience at the Czech National Bank and international institutions such as the ECB, the EC,… Mateusz Sutowicz Senior Economist, Poland Mateusz is a Senior Economist based in Warsaw and joined ING in 2025. He graduated from the Catholic University of Lublin and previously worked as a financial market analyst at Bank Millennium for… Dmitry Dolgin Chief Economist, CIS Dmitry is a Chief Economist covering Russia and CIS countries. He joined ING in 2018 and has a decade of experience in macroeconomics and FX strategy with Alfa-Bank and Gazprombank.
Dmitry… Chris Turner Global Head of Markets and Regional Head of Research for UK & CEE Chris is Global Head of Markets and Regional Head of Research for UK & CEE. Together with his team, he provides short and medium-term FX recommendations for ING's corporate and…
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