Falling oil prices are strengthening the zloty. The euro is trading close to 4.23 zł.

The złoty gains as oil prices fall

Lower oil quotes have improved sentiment around the złoty. On Monday morning EUR/PLN stood at 4,2361 zł, or half a grosz less than before the weekend. For people exchanging money, that means the euro is slightly cheaper today than at the end of last week.

The euro rate has fallen to its lowest level in two weeks and is edging toward the lower boundary of the spring consolidation range. Since the beginning of March, the euro rate has moved between 4,2250-4,3070 zł. On the technical side, meaning when looking at the chart and support levels, 4,2250 zł remains important. At the time of publication, the rate was still about one grosz away from that level.

If that support were broken, the rate could fall to around 4,15 zł. That is the February 2025 level, which was a multi-year low. For now, however, investors are mainly watching whether the złoty can keep its edge over the euro after the drop in commodity prices.

The move stems from reports about a possible opening of the Strait of Hormuz. The market reacted to speculation tied to talks involving Iran, and a 5 percent drop in oil prices supported emerging-market currencies. PKO BP analysts note that the złoty usually benefits when oil gets cheaper, because the two assets are closely linked.

The dollar also weakened in morning trading. USD/PLN was quoted at 3,6392 zł, nearly one and a half grosz lower. The Swiss franc was strengthening globally and cost 4,6547 zł on the Polish market. For people repaying loans in francs or exchanging savings, that means the currency remains relatively expensive.

Sources

1. Current exchange rates: National Bank of Poland (average exchange rate table)