My Polish neighbor recently warned me to be pessimistic about the zloty.

His arguments: the current government and concerns about Ukraine.
But as I looked more closely at the euro-zloty pair, a more interesting picture emerged than I expected.

The exchange rate is currently around 4.27 PLN per euro – historically, that's actually nothing special.
But the chart tells a different story. After the Ukraine war, the euro initially rose significantly, but has been falling again for three years.
That made me curious: what's behind it?

Inflation in Poland was 3.7% in 2024, with 3.6% expected for 2025, and it should drop to 2.8% in 2026.
In the Eurozone, the figures are much lower: 2.4% in 2024, about 2.1% in 2025, and only 1.7% in 2026.
That's already an important point for the strength of the zloty.

What surprised me: Poland has a key interest rate of 4.75%, well above the European level of 2.0%.
Higher interest rates usually attract investors and support the currency.
Although there could be rate cuts in 2026, for now, the zloty has a clear advantage here.

Poland's GDP growth is estimated at 3.5% for 2025 and 2026 – significantly better than the Eurozone with 1.2% and 1.0%, respectively.
The unemployment rate in Poland is 3.1%, while in the Eurozone it's 6.2%.
These are strong arguments for the zloty.

On the other hand: Poland's public debt has increased, now over 416 billion euros by Q2 2025.
Geopolitical risks remain present, and the war in Ukraine continues to directly burden the neighboring country.
Millions of Ukrainian refugees need to be supported – with an employment rate of nearly 70%, which is quite remarkable.

What does this mean for the euro-zloty exchange rate?
Most analysts expect a sideways movement.
Some predict a decline to 4.20, others see 4.44 by the end of 2026.
The Erste Group forecasts 4.30.
Honestly: it could go in any direction.

For a depreciation of the euro, the higher Polish interest rates and stronger growth speak.
Against that: the lower inflation in the Eurozone and the more stable debt situation.
A sideways movement is also possible because these factors could balance each other out.

My conclusion: I couldn't quite agree with my neighbor.
The zloty has appreciated significantly in recent months and has fundamental arguments on its side.
But the increased inflation and geopolitical risks shouldn't be ignored either.
For active traders, the pair offers quite interesting setups, especially in sideways markets.
The daily ranges are manageable – it's more relaxed than with other pairs.
And honestly: there are fewer spectacular topics to discuss with neighbors than this currency pair.