Commerzbank’s Tatha Ghose highlights that while CE3 currencies have stabilized with the Euro, the Polish Zloty continues to underperform peers. He links this to institutional frictions between Poland’s government, president and central bank over NBP board appointments. Ghose expects NBP’s structure to remain uncertain but does not foresee major monetary policy shifts, viewing the news as extending, not transforming, PLN’s negative backdrop.
Institutional frictions and currency lag
“Over the past week, however, the euro stabilised somewhat, allowing regional currencies to regain some lost ground from the recent bottom. The relative performance ranking, however, remained the same since before the change of trend: the Polish zloty continues to underperform the peer group, the Czech koruna performs in the middle and the Hungarian forint remains the outperformer.”
“Poland-specific institutional developments are not helping the zloty’s performance. The government and central bank continue to be in adversarial positions. President Karol Nawrocki will re-submit four nominations to Poland’s National Bank (NBP) Management Board for PM Donald Tusk’s countersignature, after Tusk blocked the same names in May.”
“The issue could become more pressing when deputy governor Adam Lipinski’s term expires on 4 November. This would leave the Management Board with only 5 members, fewer than the statutory 6 (although legal experts generally do not expect NBP’s decisions to become invalid with 5 members).”
“NBP’s structure may therefore become uncertain in the foreseeable future, but we do not suspect far-reaching monetary policy implications: NBP was willingly cutting rates earlier this year when this was possible – that should have diffused earlier tension with the government. As a result, while such developments extend the negative environment around the zloty, they are not significantly new negatives.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
