Polish Zloty faces pressure from constitutional crisis – Commerzbank

Against a deteriorating fiscal and ratings backdrop, Commerzbank’s Tatha Ghose sees grounds for a particularly bearish view on PLN relative to other Central European currencies. He points to Poland’s escalating institutional dispute, which now extends to the Constitutional Tribunal and is putting pressure on the Polish zloty. The deployment of riot police and competing claims to judicial leadership underscore the political tensions behind his assessment.

Polish zloty lags as institutional tensions deepen

"PM Donald Tusk had to deploy riot police to secure the court on Friday after coalition-backed justice Anna Korwin-Piotrowska moved to suspend PiS-aligned Tribunal head Bogdan Swieczkowski and his deputy. PiS leaders and allied groups protested outside the court, while President Karol Nawrocki abandoned an overseas trip and returned to join the confrontation."

"Whatever the merits of the arguments, using competing institutional claims and deploying riot police creates the appearance of a constitutional crisis one year before the general election – this is also precisely the kind of political stand-off and tensions we have been warning about, leading us to be the most bearish on the Polish zloty relative to other CE3 currencies."

"The zloty extended its underperformance of CEE peers following the weekend protests, with EUR/PLN briefly reaching 4.4372. This is no longer just about inflation data or NBP’s dovish stance – political conflict is spreading across key institutions just as the fiscal and rating backdrop is deteriorating."

"We think that the risk of a sharper zloty move may be mounting."

(An editor reviewed this article, which was produced with the assistance of an artificial intelligence tool. Find out more.)