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Bank Gospodarstwa KrajowegoPoland faces risk of EUR/PLN rate returning towards 4.32 in Q1 2025 (opinion)
There is a risk of a return of the EUR/PLN exchange rate towards 4.32 and USD/PLN to 4.11 in the first quarter of 2025, economists at Poland's state development bank BGK forecast in their quarterly report. Looking ahead to the coming quarter, BGK expects a marginal strengthening of Polish bonds.
"In the following months, we expect a gentle downward pressure on the zloty. We estimate that this will be primarily a derivative of the MPC's less hawkish approach and increasing market expectations for an interest rate cut in the first half of next year," BGK economists forecast.
"We see a risk of the EUR/PLN exchange rate returning to 4.32 and the USD/PLN exchange rate to 4.11 in the first quarter of 2025," they added.
Looking ahead to the coming quarter, BGK economists expect a marginal strengthening of Polish bonds.
"This will be driven by both global and local factors. We expect the market to gradually price a 100 basis points interest rate cut by the Fed in the 2025 horizon, which should reduce pressure on EM debt, including Polish treasury bonds," BGK economists wrote.
The experts also expect a decline in German Bund yields, which causes them to expect the underlying fixed income to radiate positively into Polish treasury bonds.
"On the other hand, the asset swap spread is likely to remain at levels similar to current levels, which will be related to the increased supply of Polish treasury bonds," they added.
pat/ han/ ao/