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Currency quotes. What is the zloty exchange rate? Economist Sławomir Dudek comments on the impact of the PLN quote on exports
„We are nearing the pain threshold for exporters,” states Sławomir Dudek, economist, during his segment on TVN24. „Our economy heavily relies on exports. The ratio of exports to GDP, which represents the total value of produced goods, is approaching 60 percent.” He elaborates that as the value of the złoty rises, „the profit margins on exports diminish.” Recently, the złoty has appreciated against both the euro and the dollar, achieving multi-year peaks.
During Tuesday’s trading session, the złoty reached new 8-year highs against the euro, which peaked at PLN 4.131. Subsequently, the currency retraced nearly all its gains, closing the session with the euro priced slightly above PLN 4.14. Against the dollar, the złoty strengthened throughout the day, gaining less than 0.5 percent to settle at PLN 3.942, briefly surpassing 3.94 in the afternoon. The dollar currently holds its lowest value since October 2024.
Two sides of the coin
“There are two sides to this issue,” comments Sławomir Dudek regarding the implications for the nation. “While it may appear advantageous that imports are cheaper, there are numerous channels through which this affects the economy. Both our daily lives and the broader economic landscape are impacted,” he notes. He highlights that we are paying „relatively less” for imported goods such as oil, military equipment, vehicles, and food products, „but there is another aspect to consider—exports.”
“Our economy is significantly export-oriented. The ratio of exports to GDP is nearing 60 percent. We are categorized as an average open economy,” states Dr. Sławomir Dudek, economist and president of the Institute of Finance at the Warsaw School of Economics, on TVN24. He remarked that the current złoty exchange rate against the euro does not bode well for exporters. In this scenario, export profitability declines. “The profits from exports are reduced,” he clarifies.
„Pain threshold” for exporters
As the guest on TVN24 explains, half of Poland’s workforce is employed by exporting firms. He elaborates that “profitability in these firms is decreasing.” “There has been an uptick in the percentage of companies indicating that exporting is no longer profitable,” notes Sławomir Dudek. He mentions that the National Bank of Poland has been conducting research since exporters started to feel the strain from the unfavorable exchange rate, as their profitability has diminished, although „we still possess a certain buffer.”
When asked about the „pain threshold” for exporters, he states, “this threshold is not fixed; it is decreasing.” He believes that this limit stands at 4 zlotys per euro. “At around 4, it will pose a significant challenge. Currently, we are at 4.14 – 4.15 (zlotys – ed.). However, it is approaching the 'pain threshold’ for exporters, where profitability may no longer be sustainable,” the expert explains. He indicates that their costs in this context exceed their initial projections. “No one anticipated such a strong złoty,” Dudek remarks on TVN24.
When queried about the potential for the złoty to appreciate further, he shares that „forecasting exchange rates is among the most challenging tasks.” He elaborates that numerous variables can influence the złoty’s value. He observes that economists’ predictions vary widely. “Some believe this trend will persist, while others suggest we may even see a return to 4.30 – 4.40,” Dr. Dudek states.
Why is the zloty strengthening?
“As is often the case in financial markets, there are various contributing factors. One significant element is the market’s optimism regarding a resolution to the conflict in Ukraine and the possibility of peace,” he states. “Given our position as a frontline country, this is particularly relevant.”
He identifies the elections in Germany as another contributing factor. “The outcome has somewhat stabilized the situation,” he adds. As a third factor, he mentions the trade tensions with the US.
“Another crucial aspect is monetary policy and the actions taken by central banks in different nations. Our stance is hawkish, indicating relatively slow rate cuts and higher interest rates compared to the global context,” he explains, noting that other countries have begun to lower their interest rates.
“Although in the United States, the Fed chair has also indicated concerns regarding economic policies and likely won’t be reducing interest rates,” he points out. The economist elaborates that a strong złoty aids in reducing inflation, “as it lowers the exchange rate.” “Imports become less expensive,” he emphasized during his appearance on „Wstajesz i wiesz.”
“If interest rates are higher in a particular country, the exchange rate tends to be stronger,” he adds. However, he cautions that we are nearing a time when interest rates in Poland may begin to decline. “Yet, monetary policy remains unpredictable in our country,” the economist assesses.
