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2019/10/07 / Erste Group Research

Weekly Focus Poland

This week should be less eventful than the previous one. On Friday, S&P and Moody’s will review the Polish rating and we do not expect to see any change in either the rating or the outlook. On Sunday, parliamentary elections take place in Poland. The latest poll suggests that Law and Justice could secure a simple majority. The bond market should follow global developments, while we could see some negative correction on the zloty, as the markets digest the ECJ ruling.

October 13: Parliamentary elections. According to the latest poll (Kantar, October 6), four parties will enter the parliament and turnout is expected to reach a record high of 78%. According to the poll, ruling party Law and Justice will win the upcoming election with 42% support. Civic Coalition (KO) will take second place, supported by 29% of voters. Securing a simple majority would depend on the number of parties that enter the parliament as well as turnout.

Bond market drivers: 10Y yield went below 2% on ECJ ruling. During the course of the week, the long end of the Polish curve went down by almost 15bp and closed the week below 1.9%. We believe that the drop in local yields followed core market developments. In the light of no significant local or global macro releases, the markets could get some direction from the releases of the FOMC minutes and the ECB Council’s account of the last meeting. Further developments concerning Brexit should also be watched.

FX market drivers: Increased volatility on zloty. Throughout the week, the zloty was a frontrunner among regional peers, as it appreciated by almost 1.4% vs. the EUR. The EURPLN went visibly down after the ECJ ruling (October 3) on FX mortgages, as this was perceived by markets as being more positive than expected. We expect to see some negative correction to the EURPLN in the coming days. In the medium term, we see the zloty as being close to 4.35 vs. the EUR due to persisting global tensions and the unsolved Brexit issue.

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General information

AuthorErste Group Research
Product nameCEE Country Update
Topic in focusMacro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-


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