Polish Zloty: Budget risks point to further weakness versus Euro - Societe Generale
Societe Generale says Poland’s elevated fiscal deficit and rapidly rising public debt could keep pressure on the zloty, with the draft 2027 budget set to provide the next key test for investor appetite.
Societe Generale warns that Poland's fiscal deficit and public debt could further weaken the zloty against the Euro. The bank predicts that if the government fails to curb its spending, the 10-year yield on Polish government bonds (POLGB) could surpass 6% and the EUR/PLN exchange rate could drop to around 4.35. Fitch maintains Poland's A- credit rating but warns of a negative outlook due to fiscal risks, despite the country's robust economy and EU membership benefits.
The Polish government plans to keep its budget neutral by cutting income taxes for middle-class earners and increasing taxes on large corporations starting in 2027. The upcoming draft 2027 budget could be a crucial test for investor confidence in the zloty.
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