The Swiss bank updated its EUR/PLN exchange rate forecasts upward amid divergence in central bank policies and Poland's fiscal risks.
UBS has raised its forecasts for the euro to Polish zloty exchange rate. The bank now expects further weakening of Poland's national currency in the coming quarters.
According to the new estimates, the EUR/PLN rate will be 4.40 by the end of December, 4.44 by March 2027, 4.48 by June 2027 and 4.50 by September 2027. Previous forecasts were lower at 4.32, 4.34, 4.36 and 4.40 respectively.
UBS strategists Pietro Santina and Tilmann Kolb link the zloty's weakening over the past month to a challenging external environment and renewed concerns about fiscal risks in the eurozone.
The main factor putting pressure on the currency remains the divergence in monetary policy. The National Bank of Poland keeps its base rate at 3.75 percent, while the European Central Bank has already raised rates twice to 2.50 percent and, according to UBS expectations, will implement another hike in December.
The Polish government's resumption of fuel subsidies, in the bank's view, will widen this divergence. Such measures will reduce inflationary pressure and lessen the need for rate hikes by the NBP.
UBS notes that market attention to Poland's fiscal risks will increase ahead of next year's parliamentary elections. According to the Bloomberg consensus forecast, the country's budget deficit in 2026 will reach 7.1 percent of GDP.
External factors are also having an impact. European electricity prices have risen to 100 euros per megawatt-hour — the highest level since 2022 — due to attacks on energy infrastructure in the Middle East. Concerns about France's budget have worsened investor sentiment toward European assets.
Overall inflation in Poland rose to 4.1 percent year-on-year in September from 3.4 percent in August, mainly due to higher fuel prices. According to the Bloomberg consensus forecast, Poland's economic growth will slow from 3.5 percent this year to 3 percent in 2027.