The NBP is likely to raise rates in 2019, AFTER the ECB. Nevertheless, the fundamental backdrop in Poland remains very strong, with solid growth and an improving external balance. Moreover, an improving Euro area backdrop should also benefit the zloty. We think such strong growth dynamics will ultimately support gradual PLN gains over the medium term. In addition, valuation looks attractive and the authorities continue to appear comfortable with zloty appreciation.
In terms of risks, we acknowledge that we may see the zloty remain under pressure in the near term as rate expectations adjust.
Credit to Morgan Stanley Research & Bloomberg