Volatile swings are expected in risk sentiment regarding Polish government policy. Therefore, greater volatility is likely in the EUR/PLN pair in the coming year, at a central forecast level of 4.45, said Commerzbank in a research report. The currency pair has already seen severe swings up to the levels close to 4.5 in this year around January-February. Also, the pair rallied back to levels about 4.25.
Alternating bouts of worsening political risk perception and the effect of external development, such as Brexit, are driving these changes in the currency pair. However, the effects are also offset by supportive monetary policy by global central banks such as the ECB that maintains liquidity abundant and “makes capital look for higher yield destinations”, noted Commerzbank.
“We anticipate significant volatility, but we still see EUR/PLN returning back to around 4.30 by the end of 2017 as policy visibility improves,” added Commerzbank.
