Złoty struggles as dollar and domestic data weigh

The Polish złoty faced pressure on Monday, weakening against the U.S. dollar and the euro. The dollar climbed to nearly 3.73 złoty, up from 3.71 złoty earlier in the day. The euro also strengthened, reaching almost 4.27 złoty, while the Swiss franc surged to 4.61 złoty.

Market attention is focused on the U.S.-Iran peace talks that began over the weekend and efforts to fully reopen the Strait of Hormuz. Although geopolitical tensions briefly raised concerns, the new week has seen stabilization and reduced tensions.

However, the Polish currency's weakness is attributed to both the strengthening dollar on the global market and domestic economic factors. Recent data on retail sales for May, which fell below economists' expectations, are weighing on the złoty. "Tensions around the Strait of Hormuz and high expectations for U.S. interest rates are strengthening the dollar, pushing regional currencies onto the defensive," commented Michał Stajniak, an analyst at XTB. "The slowdown in domestic retail sales and lower-than-forecast wage growth are further burdening the złoty's performance."

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Tensions around the Strait of Hormuz and high expectations for U.S. interest rates are strengthening the dollar, pushing regional currencies onto the defensive. The slowdown in domestic retail sales and lower-than-forecast wage growth are further burdening the złoty's performance.