EUR/PLN volatile amid political uncertainty and confidence vote

Published 03/06/2025, 12:40
© Reuters.

Investing.com -- Prime Minister Donald Tusk announced plans to seek a vote of confidence for his government in the coming days. This move is intended to affirm the government’s mandate despite recent presidential election results.

Tusk expressed confidence in the outcome, describing the vote as a formality and emphasizing the government’s commitment to its reform agenda regardless of the presidential election results.

With Nawrocki set to become Poland’s President, the government faces potential challenges due to the President’s legislative powers. A two-thirds majority in Parliament is required to override a presidential veto, a threshold the current government does not meet.

This situation gives Nawrocki the ability to influence the legislative process. Additionally, Nawrocki will appoint the next central bank governor when Adam Glapiński’s term ends in 2028, as well as other members of the Monetary Policy Council.

Political uncertainty in Poland is expected to remain high amid speculation about the future of the ruling coalition. While early parliamentary elections are not anticipated, Tusk’s decision to call for a confidence vote is seen as risky. If the government loses the vote, a coalition between Law and Justice (PiS) and Konfederacja could form, signaling a shift to the right.

On Monday, the Polish FX market reacted briefly to Nawrocki’s presidential victory, with the EUR/PLN rising to 4.27 before falling back to 4.25. Today, the EUR/PLN rose again to 4.27, indicating that concerns related to the confidence vote persist.

The Polish FX market is expected to experience high volatility, particularly if early elections are called, which could negatively impact the markets.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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