Euro to Zloty Exchange Rate Outlook: Will the Polish Currency Continue to Appreciate in 2025-2026?

Current Euro to Zloty Exchange Rate Pattern

Poland, as a member of the European Union, has not adopted the euro, but its zloty (PLN) and euro exchange rate fluctuations are of significant reference value for Eastern European economies. As of October 2025, the euro to zloty exchange rate remains at around 4.27. In the long term, since 1998, this rate has been relatively stable around 4 PLN/EUR outside of financial crises.

However, the trend over the past three years shows clear signs of reversal. At the onset of the Ukraine war, the euro appreciated sharply against the zloty, but since then, the zloty has gradually strengthened. What economic forces are behind this change? The answer lies in the fundamental differences between Poland and the Eurozone.

Economic Competition of Dual Currencies: Six Key Factors In-Depth Comparison

Inflation Rate Differences and Exchange Rate Pressure

In 2024, Poland’s inflation rate is 3.7%, while the Eurozone’s is only 2.4%. Looking ahead, the European Commission forecasts Poland’s inflation will slightly decrease to 3.6% in 2025, while the European Central Bank (ECB) estimates the eurozone’s inflation at 2.1% during the same period. By 2026, this divergence will become more pronounced: Poland at 2.8%, and the eurozone at just 1.7%.

Persistent inflation differentials typically exert depreciation pressure on a currency. Investors tend to seek hedging assets, making the euro zone more attractive due to its lower inflation. This factor supports the euro’s appreciation against the zloty.

High-Interest Rate Trap and Supportive Power of Monetary Policy

The Polish central bank’s benchmark interest rate is currently 4.75%, significantly higher than the ECB’s 2.0%. In theory, higher interest rates should attract foreign capital inflows, supporting the domestic currency’s appreciation.

However, this interest rate differential is also the market’s focus. The Polish central bank has hinted that if inflation continues to decline, it may cut rates again in 2026. This expectation is already partially reflected in the current exchange rate. In contrast, the ECB’s policy direction remains uncertain—further rate cuts to stimulate growth or adjustments if inflation rebounds.

Government Debt Pressure and Financial Stability

Poland’s government debt reached €41.6 billion in Q2 2025, a 3.3% increase quarter-over-quarter, showing a continuous upward trend. While the absolute value remains manageable, the rising trend is concerning. Growing government debt often signals potential future interest rate hikes or credit rating downgrades, which could weaken the currency’s attractiveness.

In comparison, although some Eurozone countries face debt challenges, the overall scale is constrained by stricter fiscal discipline.

Political Stability: Progress and Challenges

The new Polish government, inaugurated in December 2023, has gained broad public support, especially in terms of rule of law and institutional reforms, earning international recognition. About 70% of Poles support Prime Minister Tusk’s coalition government. This political stability is crucial for investor confidence.

In the 2024 EU parliamentary elections, while eurosceptic and right-wing parties made significant gains, pro-European and centrist parties still hold the majority, maintaining the euro’s stability as a political tool. However, rising political risks remain a structural challenge for the eurozone.

Strength of Economic Growth and Employment

This is the most compelling factor supporting the zloty. The European Bank for Reconstruction and Development (EBRD) forecasts Poland’s GDP growth at 3.5% for both 2025 and 2026, far exceeding the eurozone’s expected 1.2% (2025) and 1% (2026).

Unemployment data also shows a stark contrast: Poland’s unemployment rate is only 3.1%, while the eurozone’s is 6.2%. This reflects the resilience of Poland’s labor market and the weakness of the eurozone, forming a solid foundation for the zloty’s appreciation.

Asymmetry of Geopolitical Risks

The Ukraine war continues to negatively impact both economies, including increased defense spending and refugee costs. However, Poland, as a direct neighbor, bears a greater burden.

Notably, the employment rate of Ukrainian refugees of working age in Poland is about 70%, alleviating some economic pressure. But in the long run, the defense costs and associated economic drag on Poland cannot be underestimated.

Forecast of Euro to Zloty Exchange Rate in 2025 and 2026

Multiple Signals from Fundamental Analysis

Based on the above six factors, market opinions on the euro to zloty exchange rate diverge:

Arguments supporting zloty appreciation (euro depreciation): Higher benchmark interest rates, stronger GDP growth, and lower unemployment create a narrative of “Poland’s economy being more dynamic.”

Arguments supporting euro appreciation: Lower inflation, more moderate government debt growth, and higher political certainty give the euro a “safe-haven asset” attribute.

Arguments for sideways consolidation: Both economies face common geopolitical risks, and their economic policies are interconnected, which may lead to the exchange rate fluctuating around current levels within a broad range.

Market consensus and technical patterns

Analysts’ views vary. Some expect the exchange rate to decline to around 4.20 EUR/PLN, while others are optimistic about reaching 4.44 EUR/PLN. The first group’s research indicates that in 2026, the rate will stabilize around 4.30 EUR/PLN.

From a technical perspective, the zloty has appreciated over the past three years but has shown a mild reversal since March 2025. Multiple rebounds at specific lows suggest support at this level, providing a basis for a rebound rally.

Probability Distribution for 2025-2026

Based on the above analysis, the highest probability scenario is a mild sideways trend, with the exchange rate oscillating within 4.20-4.35. However, due to uncertainties in trade relations after the US elections and potential growth pressures in the eurozone, downward pressure on the euro cannot be ruled out.

Opportunities and Risks for Traders

Suitable Trading Strategies

For investors seeking stable returns, carry trade strategies are worth considering: buying high-yield zloty and selling low-yield euro to earn interest rate differentials. Even if the exchange rate remains sideways, this strategy can generate steady income.

Technical traders can buy on rebounds at support levels and take profits at resistance levels, which is a relatively low-risk approach.

Risk Warnings

Although the daily volatility is modest, the exchange rate is highly sensitive to economic data releases. An unexpectedly high inflation report or central bank speech could trigger 1-2% swings within hours. Additionally, sudden escalation of geopolitical events could cause significant shocks.

Conclusion

The euro to zloty exchange rate depends on the relative resilience of the Polish economy and the recovery pace of the eurozone. While Poland outperforms in growth and employment, inflation and debt risks limit the zloty’s upside. For traders, this is not a currency pair prone to large moves, but stable interest rate differentials and moderate volatility offer opportunities for carefully planned trades.

Ultimately, investment decisions should be based on individual risk tolerance, investment horizon, and macroeconomic outlooks, rather than solely on technical patterns or historical data.