The US dollar hit its highest level in a year against the Polish zloty on Tuesday, with the euro also climbing to its strongest in nearly three months. The Polish currency weakened for a fifth consecutive day as global demand for the greenback surged on expectations of Federal Reserve rate hikes. One euro cost nearly 4.29 zloty, while a dollar fetched close to 3.77 zloty.
The dollar index rose to its strongest since November 2025, pushing the euro below $1.14 and putting the Japanese yen near a two-year low at 161.56 per dollar. Markets now assign a 36% probability of a Fed rate hike in July, up from 8% a week ago, after hawkish signals from the central bank and resilient US economic data. Stronger US growth and persistent inflation give the Fed more room to tighten, making dollar-denominated assets more attractive.
In Poland, the divergence between expected Fed tightening and a more dovish outlook for the National Bank of Poland puts additional pressure on the zloty. While the US considers rate increases, Polish policymakers have not ruled out a cut. Higher US bond yields also weighed on global equities, with the tech-heavy Nasdaq 100 falling 3.3% on Tuesday.
Food prices drop sharply, farmers struggle
Agricultural producers in Poland face mounting pressure as wholesale food prices continue to fall. In May, the prices of key farm products dropped 0.9% month-on-month and were 16.2% lower than a year earlier, according to the Central Statistical Office. The decline is broad-based, affecting grains, milk, potatoes, and livestock. The price of a litre of raw milk fell to just 1.80 zloty, while a kilogram of potatoes cost 1.17 zloty at wholesale markets – both near multi-year lows.
Pig prices saw the steepest annual drop: slaughter swine fetched an average of 5.49 zloty per kilogram, down 23.5% from a year ago. Beef and poultry also fell 6.9% and 9.3% respectively. The sustained decline reflects strong competition, rising supply, and stable demand. Grain prices have edged up slightly in recent months but remain over 10% lower year-on-year. Lower wholesale costs may eventually benefit consumers through cheaper retail prices, but they are squeezing farmers’ margins.
Poland expands LNG capacity while credit growth accelerates
Gaz-System has confirmed plans for a second floating LNG terminal in the Gulf of Gdansk, adding a third LNG import facility to Poland’s infrastructure. The new floating unit will have a regasification capacity of 4.5 billion cubic metres per year, with potential to increase to 6.1 billion. Combined with the existing terminal in Swinoujscie and the first floating unit under construction, total capacity could reach about 20 billion cubic metres per year – roughly equal to Poland’s current annual gas demand.
Long-term capacity reservations have already been secured by Orlen, PGE, Enea and Unimot. Orlen reserved 12 slots annually, corresponding to about 1.25 billion cubic metres of gas. PGE signed a 15-year deal worth an estimated 2.8 billion zloty. The expansion positions Poland not only to cover domestic needs but also to export gas to Ukraine, Slovakia, the Czech Republic and Lithuania, reducing the region’s dependence on pipeline gas from the east.
Meanwhile, the value of household loans jumped by 7 billion zloty in May from April – the biggest monthly increase since 2009 – reflecting strong credit demand. Total lending rose by 18.6 billion zloty, though business loans grew at a slower pace. The rise in credit adds to money supply, now at 2.85 trillion zloty, and signals growing domestic demand, which could support consumption and housing investment. Notably, 74% of new mortgage borrowers now opt for fixed or period-fixed interest rates, reducing sensitivity to short-term central bank moves.
Source: WNP.PL, Fot. PAP/EPA/WILL OLIVER
