The EUR/PLN currency pair is expected to gradually edge higher towards a level of 4.35 in the coming quarter, following the National Bank of Poland’s relaxed monetary policy stance. The zloty appreciated in recent months, even outperforming peers such as the Hungarian forint, despite notable adverse political developments, Commerzbank reported.

Among recent developments, there was the awkward situation recently surrounding the PiS government’s opposition to the re-nomination of Donald Tusk for European Council President, and deterioration of EU relations as a result, when even allies, Hungary and the UK, voted against Poland.

Secondly, the Constitutional Tribunal probe is ongoing and could re-escalate at any time; this week, European Commission Vice-President Frans Timmermans remarked that the Polish government’s response to EC recommendations has been unacceptable — it could easily have triggered the use of the so-called Article 7 sanctions (which could strip Poland of its EU vote).

But, despite calls on him to activate this clause, Timmermans is resisting because of other political re-occupations in EU. Finally, the PO opposition has called for a vote of no confidence in the PiS cabinet and PM Beata Szydlo which will be held around April 5-7. Ruling PiS will be able to win the vote in the Parliament, no problem, but this is not to gloss over the fact that PiS’ approval ratings are no longer rising.

In fact, polls express greater public confidence in PO’s ability for foreign policy. All said, the zloty has remained unaffected, which probably reflects some kind of market ‘fatigue’ after constant debate and discussions of Polish political risks over the previous year, which ultimately led to nothing significant, the report added.