EUR/PLN seen rising mildly to 4.40 level next year, says Commerzbank

The EUR/PLN currency pair is expected to rise mildly to 4.40 level over the course of coming year, according to the latest research report from Commerzbank. The European Commission decided to go ahead and refer Poland to the European Court of Justice (ECJ) on alleged violation of judicial independence through its new Supreme Court act.

EC warned the Polish government not to proceed with the contested law until ECJ has reviewed the challenge. This step follows EC's infringement procedure for the same issue launched in July, where this next step was also warned about. EC's objection surrounds the removal of 27 judges as well as the chief justice because of a reduction in retirement age; whereas the Constitution protects the terms of these judges.

Many questions surround this particular issue – for example, even if the ECJ were to ask the Polish government to defer the new law, the new law will apply again in future. There were a lot of criticism and protests in Poland, but PiS approval ratings still hold at a level which indicates victory in the next election, the report added.

"Hence, while interim developments may keep the risk premium elevated, it does not appear that the political fallout for PiS might be too painful," Commerzbank commented.