Polish Zloty: Pressured by constitutional crisis – Commerzbank

Commerzbank’s Tatha Ghose highlights that Poland’s deepening institutional conflict, now involving the Constitutional Tribunal, is weighing on the Polish Zloty. With riot police deployed and rival claims to judicial leadership, he warns that political tensions, alongside deteriorating fiscal and rating backdrops, justify a particularly bearish stance on PLN versus other Central European currencies.

Institutional conflict and currency underperformance

"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."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)