Zloty weakens as oil prices pressure Poland

For Poland, the problem is straightforward: as a net importer of energy, a stronger oil market tends to worsen the trade and inflation backdrop, making the zloty less attractive. Rising crude can keep headline inflation sticky and leave the real policy rate negative, especially when the Fed and the ECB are still in tightening mode.

Domestic data are not helping. September retail sales in Poland rose less than economists expected, adding to signs of weaker industrial performance and a sharp slowdown in real wage growth. That combination lowers the odds of near-term rate increases from the National Bank of Poland and removes one of the zloty’s main supports.

The currency is also missing the usual tailwind from a firmer dollar. The euro was trading above $1.12 against the greenback, and the dollar cost 3.8858 zloty, up 0.7 grosz on the day but still well below this year’s peak of 3.9348 set more than a week ago.

Sterling and the Swiss franc were both stronger against the zloty, with GBP/PLN at 5.2073, near a two-year high, and CHF/PLN at 4.73. Bloomberg-style technical gauges also show the oil market remains stretched: USO’s relative strength index is still elevated at 78.4, underscoring how crude’s rally continues to feed pressure across emerging-market currencies.

For investors, the key question is whether oil stays high enough to cap further zloty gains into month-end. If energy prices remain elevated and domestic data keep softening, the Polish currency may struggle to extend its recent recovery even if broader risk sentiment stays supportive.