Christopher Waller’s signal that he favors leaving U.S. rates unchanged in September pushed back expectations for another Federal Reserve hike and helped weaken the dollar, allowing the zloty to firm and euro/zyloty to slip to its lowest level in a week.
Zloty Firms as Fed Rate-Hike Odds Fall
That matters because the move was not just a short-lived currency swing: it reflected a rapid repricing of Fed policy odds, which can feed directly into global funding costs, capital flows and the cost of imported goods for Poland. As the dollar eases, risk assets tend to recover, and Central European currencies such as the zloty usually benefit when investors pull back from defensive positioning.
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By Friday morning, the euro traded at 4.3188 zlotys, about half a grosz below Thursday’s close, after falling 0.7 grosz the day before. The dollar was quoted at 3.7136 zlotys, while the Swiss franc slipped back below 4.60 zlotys to 4.5955. Against the euro, the dollar held near 1.1630.
Waller’s comments were enough to trim the market’s implied probability of a September hike to about 50% from 63% a day earlier. That shift is important because only one additional hawkish vote can be enough to move short-term rate expectations when investors are already sensitive to signs that U.S. policy may be nearing a turning point. In that sense, the zloty’s gains were less about Polish fundamentals than about a softer dollar and a brief improvement in global risk appetite.
Polish market participants also had reason to focus on the move in the dollar because it affects import costs, especially fuel, which is priced in greenbacks on global markets. A weaker USD/PLN exchange rate eases pressure on domestic prices at the margin, even if the broader inflation picture remains driven by local and regional factors.
Still, the rally in the zloty may prove fragile. PKO BP analysts said the rebound in risk assets could be only a short-term correction because the fundamental backdrop has not changed and geopolitical risk remains elevated. That leaves Friday’s U.S. payrolls report as the next major catalyst: a softer-than-expected reading would reinforce the case against another Fed hike, likely keeping the dollar under pressure and extending support to emerging-market currencies. A stronger report, by contrast, could quickly reverse the move.
| Entity | Gains | Losses |
|---|---|---|
| Zloty | ▲Stronger FX level | ▼Exporters with hedged dollar receipts |
| Dollar bears | ▲Softer Fed pricing | ▼Long-dollar positions |
| Polish consumers | ▲Lower import costs | ▼Fuel sellers with higher input costs |
| U.S. hike skeptics | ▲Lower odds of September hike | ▼Fed hawks and rate-sensitive dollar bulls |
